During Lordstown’s earnings call on Monday, it disclosed a widened loss of $81.2 million. After which, General Motors announces that it sold its stake in the company which is worth less than 5% of the EV startup. Around 7.5 million shares of common stock were sold, known to have an equity value of $75 million.
During its earnings call on Monday, the startup shared plans to produce and sell up to only 3,000 Endurance trucks through 2023, with 500 of those expected to sell this year. Which would be, if the company raised more money. Lordstown told on Monday its investors that it needed to raise another $250 million in order to build the 500 trucks. Here, the extra plea for money already doesn’t look great, but what’s more, is that the updated guidance is far below the 32,000 units former management promised investors in the lead up to Lordstown’s public listing via a SPAC deal in October 2020.
The relationship between Lordstown and GM goes back to 2018 when GM said it would be closing down its Lordstown factory, which former President Donald Trump took issue with. Then GM sold the plant to another toiling EV company, Workhorse (which, by the way, is still struggling per its own Q4 earnings that showed a quarterly loss of $1.13 per share).
Lordstown factory
Workhorse’s founder and former CEO, Steve Burns, started Lordstown Motors with plans to build electric trucks in the old GM factory, and GM invested $75 million in the company. Lordstown invested about $240 million into the factory but wasn’t able to get it off the ground. Following a series of dramas, including losing key leadership amidst production issues, Lordstown revealed it didn’t have enough cash to make it to 2023, so it sold the factory in September to iPhone assembler Foxconn for $230 million. However, the deal hasn’t closed yet, and Lordstown’s leadership said on Monday that the factory deal was not as far along as they expected, another announcement that undoubtedly caused investors to squirm in their seats.
In the past, Lordstown also released the results of a report conducted by a special internal committee amidst accusations that the company was faking preorders of its debut electric pickup. This led to the initial downfall of the company. Just when the company looked like it is picking up, another investor is backing out, leading to more questions about where the company is headed. It remains unclear about the further steps the startup is going to take.
