Lordstown Motors Drops 16% Following Q3 Earnings, But Analyst Says Dip Buyers Beware

Lordstown Motors Corp RIDE shares dropped 16.6% on Thursday after the company’s third-quarter earnings report underwhelmed the market, but one Wall Street analyst said investors should think twice about buying the dip in Lordstown.

The Analyst: Bank of America analyst John Murphy reiterated his Underperform rating and $5 price target for Lordstown.

The Thesis: On Thursday, Lordstown reported a third-quarter adjusted EPS loss of 54 cents, beating analyst estimates of a 59-cent loss. Lordstown did not report any revenue for the quarter. The company also delayed the launch of its Endurance electric pickup from Q2 to Q3 of 2022.

Lordstown shares rocketed higher by 24% on Thursday prior to the earnings report, driven largely by EV stock momentum seemingly triggered by Rivian Automotive Inc RIVN, which completed one of the largest IPOs of 2021 on Wednesday.

Rivian shares gained 29% on their first day of trading, giving the EV stock a market cap of roughly $110 billion, larger than both Ford Motor Company F and General Motors Company GM. Like Lordstown, Rivian does not yet produce vehicles.

Related Link: Tesla Up 50% In A Month: Is The Stock Set Up For A Short Trade?

Murphy said Lordstown still has plenty of risks ahead in coming quarters. He said Lordstown is a key beneficiary of the trend toward automotive industry electrification, but it is still only one of many companies competing for a share of the EV market.

Murphy said Lordstown has faced several operational and financial hurdles in recent quarters while the EV competition ramps up.

“Moreover, the proof points of success for RIDE’s technology/product beyond disclosed non-binding preorders are still very much lacking, while the timeline to commercialization at scale (2022+) is still some ways off, which could result in substantial volatility for the stock in the interim,” Murphy said.

Overall, Murphy said the company’s third-quarter numbers and updated outlook did little to change his cautious take on the stock.

Benzinga’s Take: The good news for Lordstown investors is that the stock’s ridiculous 24% gains on Thursday mean it's down less than 3% overall over the past five days, even after Friday’s huge sell-off. The bad news is that yet another Endurance delay means the window of opportunity for competitors to beat Lordstown to the market will once again remain open longer than investors had hoped.