Lordstown Motors’ shares tumble after slashing 2021 manufacturing plans, says it wants extra capital

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Lordstown Motors Corp Chief Government Steve Burns poses with a prototype of the electrical automobile start-up’s Endurance pickup truck, which it’ll start constructing within the second half of 2021, on the firm’s plant in Lordstown, Ohio, U.S. June 25, 2020.

Lordstown Motors | Reuters

Shares of Lordstown Motors tumbled greater than 9% throughout after-hours buying and selling after the corporate slashed its manufacturing steerage for the yr and mentioned it might want to increase further capital.

In an announcement Monday, Lordstown CEO Steve Burns mentioned the corporate has “encountered some challenges” because it prepares to start manufacturing of an electrical pickup truck known as the Endurance in late-September.

Lordstown mentioned it expects to provide — at finest — half of the autos it beforehand forecasted this yr. It additionally mentioned its projected bills can be between $335 million and $350 million, up from between $220 million and $235 million. It additionally lowered its forecast for year-end liquidity from a minimum of $200 million to between $50 million and $75 million in money and money equivalents.

Burns cited “considerably larger than anticipated expenditures for elements/gear, expedited transport prices, and bills related to third-party engineering sources” as causes for the rise in bills.

“We secured a variety of vital elements and gear prematurely, so we’re nonetheless able to ramp the Endurance, however we do want further capital to execute on our plans,” he mentioned. “We imagine now we have a number of alternatives to lift capital in numerous types and have begun these discussions.”

The adjustments are the newest blow to Lordstown. Shares of the aspiring automaker tumbled final week after Wolfe Analysis downgraded the inventory to underperform with a $1 value goal following the debut of the Ford F-150 electric pickup, a competitor to the Lordstown Endurance.

In March, Lordstown additionally confirmed the U.S. Securities and Change Fee had requested data relating to claims by quick vendor Hindenburg Analysis that it misled traders.

Hindenburg accused Lordstown in a March report of using “fake” orders to lift capital for the Endurance. The quick vendor claimed the pickup was years away from manufacturing, nevertheless Lordstown maintains it is on observe to start out making the automobile in September.

Lordstown went public by means of a particular objective acquisition firm, or SPAC, in October. It’s amongst a rising group of electrical automobile start-ups going public by means of offers with SPACs, which have grow to be a well-liked method of elevating cash on Wall Avenue as a result of they’ve a extra streamlined regulatory course of than conventional preliminary public choices.