Lordstown Motors (NASDAQ:RIDE) was recently trending upwards because of social momentum, but now RIDE stock is crashing due to business concerns.
Meme stock mania was responsible for pushing RIDE stock significantly higher in recent days. But, an SEC filing warning of “going concern” has killed that rally outright.
What is the going concern?
Basically, Lordstown Motors isn’t ramping up its production and operations as quickly as the company thought it would.
So, they’re having to raise additional capital to fund the business.
But, that additional capital is proving difficult to find. If Lordstown cannot secure those additional funds, it runs the risk of shutting down.
This is not good for Lordstown, clearly. And RIDE stock’s big drop today reflects that.
We aren’t too surprised by this news. The Endurance pickup truck looks cool and has solid specifications, but the market is super competitive. We just don’t see Lordstown Motors sticking out from the competition.
Bottom Line on RIDE Stock
On one side, you have the incumbents who already have great brand equity and manufacturing capacity, like Ford (NYSE:F) and GM (NYSE:GM). And these companies are going all-in with all-electric. This alone makes it extremely tough for Lordstown to be able to compete. Coupled with its current cash crunch, RIDE is in an even tighter bind.
On the other side, you have new entrants who actually stand out from the crowd, like Canoo (NASDAQ:GOEV) and Fisker (NYSE:FSR). Both have great engineering teams and well-respected management teams with deep experience in EVs. Lordstown does not have either of these. We’re unimpressed by Lordstown Motors’s management team. Lordstown’s team does not seem like the group of folks you would trust to change the world with a game-changing pickup truck.
If they wanted to have any chance at beating out their big-name competitors, they would’ve needed a promising team and unique innovation.
Without brand equity, amazing engineering or its previous meme stock rally, Lordstown Motors has no pros but a giant, glaring con — the threat of going out of business.
Unfortunately, we see no reason to own RIDE stock.
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On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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