What happened
The stock of electric vehicle (EV) hopeful Lordstown Motors (RIDE -2.26%) plunged below $2 per share today, and it might still be going lower. Lordstown shares remained down 9% as of 3:08 p.m. ET.
So what
The slide came after the company announced it is pushing back the deadline to sign a previously announced deal with electronics manufacturing company Foxconn. The deal would turn Lordstown's factory over to Foxconn, and the two would partner on the production and development of Lordstown's electric Endurance pickup truck and potentially future models. But Foxconn has already made three prepayments totaling $200 million that Lordstown would be forced to repay if a final deal can't be signed by May 14.
Image source: Lordstown Motors.
Now what
That deadline was an extension of two weeks after the parties couldn't conclude the deal by last Friday. Lordstown will update investors again on May 9 when it reports its first-quarter financial and operational update.
But the company already warned investors it doesn't have the cash to pay back the $200 million it has received thus far. It effectively told investors that if an agreement or new extension isn't reached, investors will be hung out to dry. In the statement the company said, "Lordstown Motors has granted Foxconn a first priority security interest in substantially all of its assets to secure the repayment obligation and does not currently have sufficient available cash to repay the down payments by the repayment deadline."
The stock has already dropped about 80% in the last year. But as any investor knows, the full risk for a stock is the potential to go to zero. Lordstown will likely head further in that direction if it can't close the sale to Foxconn.
