(Bloomberg) — Shares of Lordstown Motors Corp., the embattled electric vehicle startup, fell to fresh record lows after the company renewed a warning about its ability to continue as a going concern.
Lordstown said in a regulatory filing Friday it doesn’t have enough money to fund large-scale production or commercially launch the battery-electric pickup it plans to manufacture. That came two days after telling investors it was on-track to start limited production in September.
“The current level of cash and cash equivalents are not sufficient to fund commercial scale production and the launch of sale of such vehicles,” it said. “These conditions raise substantial doubt regarding our ability to continue as a going concern for a period of at least one year.”
The aspiring truckmaker’s shares pared a drop of as much as 12% to trade down 8.3% to $5.26 as of 11:30 am in New York. The stock is down more than 70% so far this year.
Lordstown is one of a number of SPAC-acquired EV startups struggling to raise cash and move into production. The startup first alerted investors in June it’s business may not be viable without additional financing. Last month, Lordstown confirmed it was being probed by the U.S. Justice Department and Securities and Exchange Commission for allegedly misleading investors.
Preserving Cash
In Friday’s filing, Lordstown said it’s limiting spending to preserve cash and will scale back its production plans “if we are unable to raise additional capital in the near term.”
The company has said it’s mulling tapping equity markets, issuing debt, government loans or looking for “strategic partners.”
RBC Capital Markets analyst Joe Spak cut his price target for the stock to $1 from $5 immediately after the company’s latest earnings were released on Wednesday. The analyst cited a delay to the start of vehicle deliveries from the end of this year to the second quarter of 2022, in addition to Lordstown’s shortage of funds.
“Ex-additional capital the company runs out of cash by year-end,” he wrote in a note to clients.
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