What’s The Deal With Lordstown Motors?
Question for you Great Ones: Can changing a company’s CEO really change a company’s stars? Can one man make things epic? (OK, that was two questions.)
Electric vehicle (EV) maker Lordstown Motors (Nasdaq: RIDE) and its investors certainly hope so. And if Daniel A. Ninivaggi’s history is anything to go by, he could be the real thing.
On Thursday, Lordstown named Ninivaggi its new CEO. I won’t even try to pronounce that name … but, what’s in a name? Would Ninivaggi’s previous executive positions at Lear or Federal-Mogul smell as sweet if his name were … say, David Johnson? The world may never know.
The point is, Ninivaggi has been elbows deep in the automotive industry for decades. After holding C-suite level positions at Lear and Federal-Mogul — two of the biggest automotive parts suppliers in the world — Ninivaggi became CEO of Icahn Enterprises, which, if we’re being honest, has its hands in a little bit of everything. Just like its namesake.
So, this Niniwhatever guy has automotive experience? So what? Lordstown is dead money. It’s nearly out of cash!
Really? That’s what y’all think? I guess I can’t be too surprised. I have badmouthed the company quite a bit.
But let me tell you a little story about a ‘90s band called Faith No More. Some of y’all might’ve heard about them. Some of you might even remember the “flopping fish” video for their biggest hit song, “Epic.”
My wife hates that video, by the way. She never could get over that flopping fish.
My point is that none of you would’ve ever heard of them if Faith No More hadn’t changed its lead singer in 1989. One change. One guy … made all the difference.
Can the same thing happen with Lordstown Motors and Ninivaggi? Have we seen the last cup of sorrow for Lordstown?
Well, Ninivaggi is no Mike Patton … and he’s probably happy about that. But Wall Street certainly thinks he can make a big impact at Lordstown. In fact, RIDE stock cruised nearly 18% higher following the leadership announcement on Thursday.
Lordstown is certainly happy with its decision, as this statement from the company’s CEO Search Committee makes clear:
Lordstown Motors: A Small Victory
Yes, the company’s happy. Yes, Wall Street seems to be happy. But then, Wall Street can be stupidly easy to please sometimes.
The thing is, Ninivaggi has his work cut out for him. Back in June, Lordstown announced that it was basically out of money. Heck, it didn’t even have enough cash to start manufacturing the Endurance — the company’s flagship EV pickup truck. That’s not good.
Furthermore, the company said last month that the Justice Department was investigating Lordstown’s business and its SPAC public offering. That’s even worse.
And if that wasn’t enough, during its second-quarter earnings report, Lordstown reported it still had no sales and was losing money.
Even with Ninivaggi, it seems like everything’s ruined and that Lordstown is falling to pieces. But that’s not quite the case here.
You see, Lordstown landed an investment deal with hedge fund YA II. You know a hedge fund is serious when its name is unpronounceable. The deal scored the EV company $400 million in exchange for an equity stake.
Now, Lordstown is cooking with gas! And all it took was a little cash infusion. No longer dodging the landlord, Lordstown is set to begin limited production of the Endurance at the end of September. We’re not talking mass production on a Tesla scale … but it was never about that. Well, not in the early startup stages anyway.
The Gentle Art Of Making Enemies
So, Lordstown will finally produce a product. A sellable product. And sellable products bring in revenue.
What’s more, assuming Lordstown hits its September production schedule, the Endurance could be the first EV truck to hit the market, beating Tesla’s Cybertruck, GM’s electric Hummer (sorry, that name always makes me giggle), Ford’s electric F-150 and the Rivian to market.
Let me just say that first-mover status in the EV market is huge. Just look at Tesla if you want an example.
But — and this is even more important — the Endurance will be priced at $52,500. That’s roughly in-line with current heavy-duty trucks on the market, and more than $20,000 below the Rivian and the electric versions of the Hummer and the F-150.
Only the Tesla Cybertruck is reportedly cheaper … for the base model … and it doesn’t come out until next year.
In short, should Lordstown pull off this epic turnaround story, it could have the first and cheapest EV truck on the market before the end of the year.
Last Cup Of Sorrow
Did Mr. Great Stuff finally lose his mind? Is he going to recommend RIDE stock?
Hell no. What’s Mr. Great Stuff’s No. 1 rule for investing? Never. Chase. A. Massive. Rally.
Sure, I love a good turnaround story as much as the next guy. But let’s face it. Lordstown still has to hit that September production goal. It still has to sell vehicles.
And … it’s still staring down the barrel of a Justice Department investigation. Though, I think the company will probably pull a Nikola (Nasdaq: NKLA) and pin the whole mess on its former CEO. Whether that works or not remains to be seen.
However, maybe I shouldn’t be too hasty. The advent of the Ninivaggi era and the $400 million influx of cash has Lordstown Motors on the path to recovery. Just a few months after being all but bankrupt, the company is getting ready to manufacture EV trucks.
Y’all have to admit, that’s impressive. And it’s worth putting RIDE stock on your watch list, at least.
Now, I know a lot of you Great Ones out there are risk-takers. I mean, some of you are hodling Dogecoin (DOGE), for Christ’s sake.
I’m leaving this one up to you, Great Ones. If you’re one of those iron-gut types and you have a little bit of extra investing capital laying around that you wouldn’t mind losing — RIDE stock is cheap, even after a near 18% rally.
Heck, Nikola is trading at $10 with a market cap of more than $4 billion … and it doesn’t even have a product yet!
Right now, RIDE stock is hovering just below $7. At that price, even a risky play on RIDE could be worth it … if you have the stomach to bet on a company that could bring the first EV truck to market despite a Justice Department investigation.
If not, well … we’ll find something else knocking about in the EV market for you to check out.
What nobody is talking about is the real EV profit story. It’s under the hood — in the technology making it possible. (And no, it’s definitely not the lithium battery.)
This technology means a $51 trillion boom in all power needs, and it doesn’t stop with EVs.
Thanks for tuning in to the Great Stuff weekend edition. Have a tremendous rest of the weekend, Great Ones!
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Editor, Great Stuff