Lordstown Motors (RIDE) stock is up sharply on Aug. 26 after the company announced a new CEO. The EV (electric vehicle) startup company has been struggling otherwise and still trades at a steep discount to the SPAC IPO price of $10. What’s the forecast for RIDE stock and could the new CEO turn around the struggling EV company?
Lordstown Motors gets its name from the Lordstown facility that it acquired from General Motors. It went public last year through a SPAC reverse merger. However, it's among the EV startups that trade below the SPAC IPO price of $10. Canoo and Lightning eMotors are the other EV startups that trade below the SPAC IPO price.
What went wrong with RIDE stock?
Nothing actually went right with RIDE stock. Hindenburg Research accused the company of inflating its orders and also doubted the production timeframe that it provided.
Soon enough, the company admitted that the September production timeline looked tough. Lordstown also raised an alarm over its balance sheet and said that it would need to raise cash or it would run out by next year.
Lordstown Motors formed an internal committee to investigate the Hindenburg Research allegations. The company admitted that some of its orders were fabricated. The company’s CEO and CFO left and the board started to look for new leaders.
Lordstown Motors said that the ex-CEO Steve Burns’ exit “was not the result of the work or findings of the Board’s Special Committee.” However, the committee’s findings and Burn’s exit were simultaneous.
Lordstown gets a new CEO
Lordstown Motors announced that the board has appointed Daniel A. Ninivaggi as the new CEO. Previously, he served as the CEO of Icahn Enterprises, which is controlled by activist investor Carl Icahn. Icahn's association with companies often leads to a spike in their stocks, with the phenomenon famously known as the “Icahn Lift.”
Ninivaggi has experience in the automotive industry. He has also held the position of co-COO of automotive component supplier Federal Mogul Holdings Corporation. At Icahn Enterprises, he looked after the group’s parts distribution businesses and automotive aftermarket service network.
Ninivaggi's initial comments look promising. The company has already entered into an agreement to raise funds and now it needs to execute on the delivery of its Endurance pick up.
“With an absolute focus on execution, I look forward to working with the talented Lordstown management team, our suppliers and other partners to bring the Endurance to market and maximize the value of our assets,” said Ninivaggi.
RIDE stock forecast
According to the data from TipRanks, RIDE has an average target price of $9.17, which is a premium of almost 35 percent over the current prices. The stock has only one buy rating, while three analysts each rate it as a hold, and three rate it as a sell.
The forecast for RIDE stock will depend on how well it can execute on the delivery of its Endurance pickup. The model would have a first-mover advantage before electric pickup models from Tesla and Ford enter the market.
However, mere timely delivery won't help revive the stock. The company has to come up with something really appealing to compete with Tesla’s Cybertruck and Ford’s F-150 Lightning. The latter has been America’s best-selling pickup for decades. There isn't any reason to think that the all-electric model won’t be able to protect its turf from EV startups.
The leadership changes are a step in the right direction but Lordstown Motors needs to do a lot more to restore investors' confidence.