Lordstown (RIDE) stock up 8% after plans to sell Ohio plant to Foxconn

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Lordstown (RIDE) stock up 8% after plans to sell Ohio plant to Foxconn

 Lordstown (RIDE) stock up 8% after plans to sell Ohio plant to Foxconn
Image source: ParabolStudio,Shutterstock

Highlights

  • Lordstown Motors Corp. (NASDAQ: RIDE) is set to sell its Ohio assembly plant to Taiwanese phone maker Foxconn Technology Group.

  • Lordstown went public in 2020 through a SPAC merger with DiamondPeak Holdings. 

  • The RIDE stock gained 23% in one month and up 5% in the last five days.

Lordstown Motors Corp (NASDAQ: RIDE) stock rose on Thursday after the news that it is close to selling its Ohio assembly plant to Taiwanese phone maker Foxconn Technology Group.

RIDE closed at US$7.98 with an 8.42% gain at the market close on Thursday.

Lordstown had purchased the plant from General Motors in 2019. 

Here are some recent developments of the company.

Lordstown Motors Corp

According to Bloomberg, the company has been facing a cash crunch, and hence selling the factory seemed a viable option to stock up its depleting liquidity reserves. 

Lordstown went public in 2020 through a SPAC merger with DiamondPeak Holdings. The company was at US$1.6 billion after the deal.

Lordstown’s Ohio plant covers an area of 6.2 million sq feet, but it is using only 30% of the area.

The stock gained 23% in one month, and it was up 5% in the last five days. On Sep 29, the stock closed at US$7.36, with a trading volume of 7,546,748. Lordstown’s market cap is US$1.40 billion. The stock logged a 52-week high of US$31.57 and a low of US$4.77.

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Financials

In the three months ended June 30, 2021, Lordstown earned no revenue. The net loss was US$108.2 million against a net loss of US$7.96 million in the corresponding quarter of 2020.

RIDE’s cash and cash equivalents were US$365.9 million as of June 30, 2021, against US$629.8 million as of December 31, 2020.

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Lordstown Motors Corp. (NASDAQ: RIDE) gains attention on Wall Street after factory sale plan to Taiwan’s Foxconn Technology Group.
Source – pixabay

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Lordstown in the news

Lordstown has been in the news lately due to a probe by the US Securities and Exchange Commission (SEC) and the Justice Department over its inaccurate statements about preorders of its Endurance pickup truck. Founder and CEO Steve Burns had to resign in June over the episode.  

On Aug 26, the company announced to appoint Daniel A. Ninivaggi as CEO and board member after the board of directors approved his nomination.

On the other hand, the deal will pave the way for Foxconn’s entry into the US electric vehicle market. It was exploring Wisconsin earlier for building EVs there. It hopes to achieve similar success in the EV industry as it did in the smartphone business. 

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Foxconn had launched an open EV platform last year. It also signed a manufacturing deal with the EV maker Fisket Inc. The RIDE stock retreated about 2% in the after-hours session.

Earlier, General Motors had agreed to invest US$75 million in Lordstown, including US$20 million for the plant and equipment.

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Bottomline

With the global electric vehicle market booming, many companies have taken the plunge to grab a pie from the lucrative industry. Besides many established auto brands, several newcomers are also joining the fray for a share of this promising EV market. The industry is expected to grow manifold in the coming years with the current push for emissions-free vehicles. However, investors should evaluate the companies carefully before investing in stocks.

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