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Why Shares of Lightning eMotors Are Charging Higher Today

By Scott Levine – Aug 16, 2021 at 4:02PM

Key Points

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The company reports quarterly earnings today, and the market believes it'll hear good things.

What happened

Beginning the week on an auspicious note, shares of Lightning eMotors (ZEV -5.14%) are driving higher today. As of 3 p.m. EDT, shares have soared 10.1%, having retreated from the daily high of an 11.4% gain.

What has electrified the bulls today? The stock's rise likely stems from eager investors seeking to build positions before the company reports second-quarter earnings after the market closes today. 

A smiling man sits with a laptop in a chair with talking on the phone.

Image source: Getty Images.

So what

Lightning eMotors designs and manufactures electric powertrains for medium- and heavy-duty fleet vehicles such as shuttle buses and delivery trucks. Powering 43.5% higher last week, shares reflected investors' welcome reception of some positive news regarding the company. For one, Lightning announced a major deal, potentially worth $850 million to the company, with Forest River, a subsidiary of Berkshire Hathaway.

Positive attention from Wall Street also played a role; Michael Shlisky, an analyst at D.A. Davidson, initiated coverage on the stock with a buy rating and a $17 price target, according to TheFly.com. It looks like after a bit of a sell-off on Wednesday, investors are making a U-turn and picking up shares again.

It's fairly common for growth stocks like Lightning eMotors to see their shares rise before reporting earnings. Suspecting that the company will report strong quarterly results, investors hope to grab the stock on the cheap before news of the performance is widely reported and the stock rises. That seems to be the case today.

Investors are likely focusing on how well the company is tracking toward achieving its 2021 guidance: revenue between $50 million and $60 million, vehicle and powertrains sales of 500 units, and quarterly operating losses that are narrower than the $5.3 million that the company reported in the first quarter. 

Now what

Growth investors are following the EV industry closely, and while stocks like Nikola and Lordstown Motors have stumbled recently, there will also likely be plenty of winners. It seems that investors believe that Lightning eMotors could be one of the latter.

Besides the progress toward meeting its 2021 guidance, investors will want to see if the company grows its backlog from the $169 million that it had at the end of the first quarter. Should it succeed in growing the backlog, it will certainly represent an encouraging sign for the company's prospects.

Scott Levine has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares). The Motley Fool recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), short January 2023 $200 puts on Berkshire Hathaway (B shares), and short January 2023 $265 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.

Stocks Mentioned

Lightning eMotors, Inc Stock Quote
Lightning eMotors, Inc
ZEV
$0.59 (-5.14%) $0.03
Berkshire Hathaway Stock Quote
Berkshire Hathaway
BRK.A
$477,402.98 (0.07%) $317.98
Berkshire Hathaway Stock Quote
Berkshire Hathaway
BRK.B
$316.15 (0.10%) $0.31
Nikola Corporation Stock Quote
Nikola Corporation
NKLA
$2.85 (9.62%) $0.25
Lordstown Motors Corp. Stock Quote
Lordstown Motors Corp.
RIDE
$1.72 (4.24%) $0.07

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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