Embattled electric car or truck startup Lordstown Motors was hit with one more blow this week inspite of owning worked up a factory sale offer with electronics big Foxconn that would present the business much essential income for the generation of its to start with electric truck.
Late Monday, Morgan Stanley’s star analyst Adam Jonas downgraded Nasdaq-shown Lordstown shares from “hold†to “sell†and slashed his selling price target for the stock by a whopping 75 percent from $8 to $2 a share.
Lordstown shares plummeted additional than 10 percent on Tuesday, now buying and selling at $5.28.
Lordstown went community in October 2020 by way of a reverse merger with the SPAC DiamondPeak Holdings. Stock price peaked at $32 in February thanks to the hype crafted all over SPAC specials at the time and significant anticipations on Lordstown’s 1st electric powered pickup, Stamina. However, shares have tumbled this yr so far amid the company’s dire income placement, management shakeup, and a regulatory probe into alleged securities fraud.
Final 7 days, Lordstown declared it experienced struck a deal to market its only manufacturing facility in Ohio, a former Standard Motors plant, to Taiwan’s Foxconn Technology Group, greatest regarded for manufacturing smartphones and tablets for Apple and other purchaser electronics makes, for $230 million. Underneath the settlement, Foxconn will manufacture Endurance at the Ohio plant on a new platform and acquire of about $50 million of Lordstown’s popular stock. To be in a position to go on working with the facility, Lordstown ideas to enter a prolonged-expression lease for a portion of Ohio plant right after the sale concludes.
Even so, Wall Road isn’t happy with the price Lordstown has negotiated for the previous GM plant—or the basic prospect of Stamina.
The $230 million selling price tag is less than just one fifth of Morgan Stanley’s prior plant price estimate, Jonas wrote in a take note to consumers on Monday.
“We experienced formerly assumed the Endurance task would be cancelled as we do not see a path to commercial viability at any considerable scale,†he extra. “[Endurance] very likely exposes the organization to the hazard of even more elevated funds burn up and liquidity dangers even in a deal producing situation.â€
Nonetheless, the Foxconn deal will provide Lordstown with plenty of dollars to navigate its operational concerns at the very least in the quick term. The EV startup only experienced $225 million in cash on its balance sheet at the finish of the third quarter, down from $366 million at the close of the second quarter.
As of Tuesday, six of nine Wall Avenue analysts masking Lordstown price the inventory as “sell.â€
