Lordstown Motors (RIDE) Falls as Morgan Stanley Downgrades to Underweight, Saying Foxconn Deal May Leave Little for Equity Holders
- Tech lifts S&P 500, Nasdaq amid inflation, China growth worries
- Zillow (ZG) Stock Falls on Report Company Paused Home Purchases due to High Demand, a Temporary Halt Yields a Chance for Competitors Says Analyst
- Oil prices ease off highs as U.S. factory data weighs on market
- Chip Shortages are Increasingly Becoming a New Bearish Risk, Inflation Bearish for Consumer Electronics - TFI's Kuo
- Walt Disney (DIS) Stock Slips as Barclays Downgrades Amid Disney+ Growth Slowdown
Get inside Wall Street with StreetInsider Premium. Claim your 1-week free trial here.
Lordstown Motors (NASDAQ: RIDE) shares are down 3.5% in pre-open trading Tuesday after Morgan Stanley analyst Adam Jonas downgraded the stock to Underweight from Equalweight and slashed his price target from $8 to $2.
The analyst notes the plant is being sold for $230 million, which is 1/5 of the firm's prior estimate of $1.3 billion. Jonas said while the Foxconn deal saves the plant, it leaves little for equity holders.
Further, the firm has lowered their forecasts which assume the Endurance is not commercially viable.
"Lordstown is negotiating a contract manufacturing agreement with Foxconn to make the Endurance and potentially other models on a new platform," Jonas commented. "We had previously assumed the Endurance project would be cancelled as we do not see a path to commercial viability at any appreciable scale. In our opinion, continuing with the Endurance likely exposes the company to the risk of further elevated cash burn and liquidity risks even in a contract manufacturing scenario which involves shifting much of the fixed cost burden (plant and most labor) to Foxconn."
The analyst has a Bull case of $8 per share, which is based on a bullish scenario of 70k units by 2030, 12% EBITDA margin. Meanwhile, the bear case is $0, based on a scenario where the Foxconn deal falls through and there are no other options.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- US Steel (X) Stock Falls 5% as Morgan Stanley Downgrades to Equal Weight
- United Therapeutics’ (UTHR) Tyvaso’s CRL is a Second Chance for Mannkind (MNKD) Investors – Analyst
- Opendoor (OPEN) Shares on Watch as Zillow (Z) Pauses Home Purchases
Create E-mail Alert Related CategoriesAnalyst Comments, Downgrades, Hot Comments, Hot Downgrades, Trader Talk
Related EntitiesMorgan Stanley, Pre Market Movers
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!