Is the Ride Over for Lordstown Motors?

Stocks to sell

Lordstown Motors (NASDAQ:RIDE) stock, the electric car start-up, took a hard fall but then rose again on a management re-shuffle.

Source: Postmodern Studio /

The company admitted misstatements in demand for its Endurance pick-up. Then it accepted the resignations of CEO Steve Burns and CFO Julio Rodriguez. Becky Roof, an accountant who has been interim CFO at several troubled companies, was named interim CFO at Lordstown.

Our Luke Lango looked at the releases and told investors to sell. But the stock is bouncing back as Angela Strand, a director and now interim chairwoman of the board, insists Lordstown will start building Endurance in September and has enough cash to get through mid-May.

What’s the Problem?

What set all this off was a March 12 report from short sellers Hindenburg Research. Called The Lordstown Mirage , the report claimed phony orders and a road test where one truck burst into flame. The report also said Burns and other executives sold $28 million in Lordstown stock after it went public last October.

Lordstown said its internal investigation into the report found it was “in significant respects, false and misleading.” But it did admit to problems with its pre-orders, both in their seriousness and who was making them.

Previously, Burns’ team said in a quarterly filing it had “substantial doubt” it could remain a going concern for more than a year. The filing, which came without a press release, sent shares crashing.

In a first quarter report issued May 24, Lordstown said it suffered a loss of $125 million and had $587 million in cash as of March 31. Burns blamed parts shortages and the COVID-19 pandemic.

Lordstown shares peaked in February at almost $31 and bottomed May 13 at about $7. Now the stock trades at about $10.50 with a market cap of $1.8 billion.

Lordstown went public in December through a special purpose acquisition company (SPAC) called Diamond Peak Holdings. It raised $675 million in the SPAC, including $75 million from General Motors (NYSE:GM). At the time, the market cap was $3.1 billion, with the first trade at $18.75.

A Political Hue

There has always been a political tinge to the Lordstown story, as I wrote in February.

The plant is an old GM factory that operated from 1966 until 2019. Then Vice President Mike Pence spoke at the Endurance reveal a year ago. Cincinnati Bengals quarterback Joe Burrow was named a company spokesman in October.

Shares rose in January when President Biden said he wants an all-electric car fleet built by American workers. Since then, the U.S. Postal Service has given its contract for new mail trucks to Oshkosh (NYSE:OSH), which makes gas-powered vehicles. This bypassed the Workhorse Group (NASDAQ:WKHS), which owns 10% of RIDE.

The Bottom Line on RIDE Stock

Lordstown and Workhorse were stalking horses for GM’s electric car ambitions. These are now coming to fruition. If you believe Detroit can survive the electric vehicle revolution it’s in GM, which has doubled its valuation to $90 billion in 2021, where you should place your bets.

While GM did invest in the Lordstown SPAC, it has moved on. The company has announced new electric Silverado and GMC pick-ups will be built at its Detroit and Hamtramck plants. In May, Ford Motor (NYSE:F) announced an electric version of its F-150 will be part of its 2022 line-up.

The reassurance of Lordstown’s new management that they have orders and money is nice, but is not enough reason to buy RIDE stock.

On the date of publication, Dana Blankenhorn did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Write him at or tweet him at @danablankenhorn. He writes a Substack newsletter, Facing the Future, which covers technology, markets, and politics.