What happened
Lordstown Motors (RIDE -1.70%) continued a decline Tuesday morning that started after the electric vehicle (EV) start-up reported its fourth-quarter and full-year 2022 earnings yesterday. After dropping nearly 10% Monday, the stock was down as much as another 5% Tuesday morning. By 2:20 p.m. EST, shares regained some of today's decline but remained down by 1.2%.
So what
The company has been struggling to get production of its Endurance EV pickup truck ramping up. It recently announced a recall along with the suspension of production and deliveries due to quality problems. Yesterday's announcement confirmed that it only sold three trucks in Q4, generating revenue of just $194,000. Wall Street had expected sales would reach $7 million in the quarterly period. Though there was some positive news, it wasn't enough to overcome the bearish sentiment on the company.
Image source: Lordstown Motors.
Now what
Lordstown sold its Ohio manufacturing facility to contract manufacturer Foxconn last year after the companies began a partnership agreement. That agreement brought Lordstown needed cash, including $52 million that has already been funded. That helped the company end Q4 with more than $220 million in cash and short-term investments on its balance sheet.
But investors aren't giving the company much credit since that cash didn't come from selling trucks. Only three were sold in Q4 and another three through the first two months of 2023.
Regarding the recent quality problems, Lordstown CEO Edward Hightower stated,
We now have line of sight to the resolution of the issues that resulted in the production pause and voluntary recalls, and in the upcoming weeks expect to announce when we will resume production and deliveries.
The restart of production and sales will need to come quickly, or more investors will likely move on from this risky EV stock.
