Lordstown stock price forecast after CEO and CFO exit

By: Crispus Nyaga
Crispus Nyaga
Crispus is an active trader, where he is followed and copied at Capital.com. He lives in Nairobi with his… read more.
on Jun 14, 2021
  • The Lordstown stock price crashed sharply on Monday.
  • This happened after the CEO and CFO resigned.
  • The company recently expressed going concern challenges.

The Lordstown (NASDAQ: RIDE) stock price crashed by more than 16% after the company announced the sudden departure of the Chief Executive and Chief Finance Officer. The shares are trading at $9.73, bringing the company’s total market capitalisation to more than $1.7 billion.

Lordstown stock price
Lordstown stock price chart

Lordstown CEO and CFO are out

Lordstown is an electric vehicle (EV) startup that has become one of the most volatile companies in the United States. Like all EV startups, it is facing rising costs and a semiconductor shortage. 

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Most importantly, it is facing rising competition from companies like Ford and Tesla. In May, Ford launched a new F-150 electric truck that will sell at a lower price than Lordstown’s Endurance truck. As such, analysts seem to believe that many customers will opt for the truck manufactured by Ford, which is a well-known brand with a vast dealer network.

Meanwhile, Wall Street analysts have continued to slash their expectations about the stock. Last month, analysts at Wolfe Research lowered their target from $27 to $1. Analysts at Royal Bank of Canada (RBC) have also slashed their expectations from $9 to $5. Those at Deutsche Bank expect it to drop to $8 while those at Goldman Sachs expect it to keep falling. 

As such, the announcement that the company’s CEO Steve Burns and CFO Julio Rodriguez will resign has not helped the Lordstown stock price. The two will be replaced on an interim basis by Angela Strand and Becky Roof. The board said:

“As we transition to the commercial stage of our business – with planned commencement of limited production in late-September – we have to put in place a seasoned management team with deep experience leading and operating publicly-listed OEM companies.”

So, is Lordstown stock a good investment?

Fundamentally, there are many issues faced by Lordstown Motors. For one, as mentioned, the company faces high competition from new and incumbent automakers. This means that it will need to do a lot of user education to explain why its trucks are better. 

Second, it also faces significant cost issues. Just last week, the company released a report in which it raised significant going concern issues. This means that it might find a lot of challenges supporting itself financially.

Still, the company has a catalyst that could make it a good short-term investment. As shown below, Lordstown stock has a high short interest. This means that most of the shares are held by short-sellers. As such, the company could become a viable target by Reddit investors.

Lordstown short interest
Lordstown short interest

Lordstown stock price analysis

RIDE stock price
RIDE stock price chart

The daily chart shows that the RIDE stock price formed a triple-top pattern at $31.75 from September last year. Its neckline was at $12. The stock moved below that level on March 23rd and dropped to an all-time low of $6.65 in May. 

Today, the shares are below the 23.6% Fibonacci retracement level. It has also moved below the 50-day and 25-day exponential moving averages (EMA). Therefore, the shares will likely keep falling as short-sellers target the support at $6. The only risk to this thesis is if the shares become a target of meme traders.

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