Lordstown Motors (RIDE) has had a dismal run as a publicly traded company, to say the least. On Oct. 11, the stock touched yet another 52-week low. While the stock has had its moments, it has been in a downtrend and is trading at just half its SPAC IPO price. Is the worst over for RIDE? Could it attract the attention of Reddit traders?
Lordstown, a startup EV (electric vehicle) company, gets its name from the Lordstown factory that it acquired from General Motors. Like many other EV startups, it opted for a SPAC merger to go public.
Lordstown is selling its plant to Foxconn
Lordstown Motors is selling its Lordstown facility (excluding some assets) to Foxconn for $230 million. The price tag might seem high considering that the company acquired it two years back for $20 million, but Morgan Stanley believes the company is actually selling the assets at one-fifth of their value. It downgraded the stock and lowered its target price to $2.
RIDE stock's forecast
The forecast for RIDE stock will depend on how its upcoming Endurance model plays out. The company has said that it's changing the vehicle's production and delivery timelines, and would provide more details in its third-quarter earnings call.
Meanwhile, Wall Street analysts aren't bullish on RIDE, with only one “buy” rating among seven analysts polled by TipRanks. Three analysts recommended “hold,” and three “sell.” Their average target price of $6.67 for RIDE implies a 40 percent upside.
RIDE stock's short interest
According to Ortex, about a quarter of RIDE’s free float has been short sold, while its days-to-cover ratio is 3.73. The short interest looks high enough to trigger a short squeeze, but some buying support would also be needed.
So far, short-sellers seem to be behind RIDE stock's movements, as it has been plunging from one low to another. Whereas the appointment of Dan Ninivaggi as CEO and reports of funding from a private equity company triggered rallies, these bounces have been too few.
Could WallStreetBets be interested in RIDE stock?
WallStreetBets love EV stocks. Tesla is among the most popular names in the group, along with Lucid Motors, NIO, Fisker, and Workhorse (from which Lordstown was spun off). Whereas RIDE stock isn't as popular in the group, given its high short interest and the positive outlook for the EV industry, that could soon change.
The update on the Endurance pickup model could boost Lordstown stock. It's also worth noting that RIDE stock's market cap is below $1 billion, making it among the cheapest EV startups. Nikola and Fisker, for instance, have market caps in excess of $4 billion, and Lucid Motors has a humongous market cap of almost $40 billion.
Although market capitalization isn't the perfect metric for valuing a company, in the absence of other financial metrics, it's sufficient. RIDE stock's outlook seemed bearish before, but after its crash, it seems to be worth a look. While it's a risky bet, so are other startup EV companies.