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Why Romeo Power Stock Is Sinking Today

By John Rosevear – Aug 17, 2021 at 10:48AM

Key Points

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A big earnings miss triggered a sell-off -- but the CFO says it's a matter of timing.

What happened

Shares of Romeo Power (RMO) were down sharply on Tuesday morning after the company reported second-quarter revenue that fell far short of Wall Street's estimate. As of 10:30 a.m. EDT, Romeo Power's shares were down about 19.6% from Monday's closing price. 

So what

Romeo Power reported its second-quarter results after the U.S. markets closed on Monday, and they weren't what Wall Street had expected. The company said that it lost $28.7 million, or $0.22 per share, on revenue of $926,000. Wall Street analysts polled by Thomson Reuters had expected a loss of $0.16 per share on revenue of $2.37 million, on average. That's why the stock is down today.

But during the company's earnings call, chief financial officer Kerry Shiba said that the revenue shortfall was a matter of timing. The company has been working to ramp-up production of its modular battery packs for electric-heavy vehicles, but it only secured a long-term supply of battery cells last week. (Romeo Power hasn't named its supplier.) 

A rendering of an upcoming Peterbilt electric semi truck.

Big-rig stalwart Peterbilt is among the companies waiting for Romeo Power's battery packs for its new range of BEV trucks. Image source: PACCAR.

Shiba said that investors should expect the company to hit its rather broad prior-guidance range for full year revenue of $18 million to $40 million. But, he said, investors should now expect much of that revenue to come in the fourth quarter. 

Now what

At least one analyst is maintaining his upbeat rating on Romeo Power's shares, though he did trim his bank's price target. In a note on Tuesday morning, BTIG analyst Gregory Lewis cut his price target to $12 from $15, while maintaining a buy rating and noting that the company will need a "strong finish" to hit its full-year guidance range.

John Rosevear has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Stocks Mentioned

Romeo Power, Inc. Stock Quote
Romeo Power, Inc.
RMO

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