Lordstown Motors woes continue after guidance cut, capital raise announcements

Lordstown Motors Corp (NASDAQ: RIDE) investors are dealing with yet another concerning headline that sent the stock lower by around 15% Tuesday morning. RIDE stock is reacting to the downside after the electric pickup truck maker revised its production guidance lower and said it needs to raise additional capital.

Lordstown says it ‘encountered some challenges’ in Q1

Lordstown reported Monday afternoon first quarter results along with a business update. Investors are paying attention to revenue and other traditional metrics given the fact the company remains in the production stage. However, what is of interest to the investment community is management’s business update.

Lordstown said in conjunction with its Q1 earnings report that 2021 production of its Endurance truck to now be “at best” 50% of its prior expectation. Projected expenses were revised higher from a range of $220 - $235 million to $335 - $350 million. Also, management lowered its year-ending liquidity expectations from at least $200 million to a new range of $50 - $75 million.

Lordstown CEO said its revised guidance is necessary after the company “encountered some challenges,” both industry-wide issues and those related to COVID-19. Most notably, the company experienced “significantly higher than expected” costs related to parts, equipment, shipping costs, and expenses associated with third-party engineered resources.

Management needs access to more cash

The “challenges” Lordstown faced in the reported quarter places the company in a position where it needs to raise additional cash. The company confirmed it is already in talks to raise capital “in various forms.”

If Lordstown manages to raise capital quickly it can be in a position to reinstate its prior production guidance. In the meantime, Lordstown hinted that Ford Motor Company (NYSE: F) and the launch of its F-150 electric pickup truck is a “watershed moment” for the industry.

While not naming Ford by name, Lordstown said it still holds a first-mover advantage against the much larger and more experienced Ford whose truck will only start production next spring. Lordstown CEO Steve Burns said this during the company’s post-earnings conference call:

We are on par with somebody like that at this point, and we’re getting to market faster. We want as many people buying our vehicle while we’re the only game in town. We want to be on version 2.0 when somebody comes out with version 1.0.