Why This Analyst Sees a Bumpy Ride Ahead For Lordstown

Lordstown Motors Corp RIDE is moving lower after an analyst at BofA Securities hit the sell button on the electric vehicle maker's stock.

The Lordstown Analyst: Analyst John Murphy downgraded the shares from Neutral to Underperform and halved the price target from $11 to $5.

The Lordstown Thesis: Lordstown is now one of the many participants in the automotive industry's evolution toward electrification, analyst Murphy said.

The company is also one of the less legitimate along the universe of start-up EV makers, he added.

After initially ranking well in BofA's AutoTech entrant/SPAC analysis, the company is now being plagued by a series of operational and financial hurdles, the analyst noted. At the same time, competition is heating up, he said.

Related Link: Tesla Cybertruck Vs. Ford F-150 Lightning Vs. Lordstown Endurance: Vs. Rivian R1T: How They Stack Up

BofA sees downside risks stemming from the company's inability to raise low-cost capital, convert non-binding preorders into contract orders or vehicles, execute a go-to-market strategy and reach sustainable positive EBITD and free cash flow.

On the other hand, better-than-expected progress toward the start of production, customer traction for its products, battery tech innovation and incremental government support or stimulus for the EV market could be potential sources of upside, the firm added.

Lordstown Price Action: At last check, Lordstown shares were down 3.14% to $6.65.

Related Link: Fisker, Lordstown Could Be EV Latecomers, Goldman Sachs Says In Downgrade

Photo: Lordstown Motors Corp