| Analyst Adam Jonas at Morgan Stanley on Tuesday downgraded his rating on Lordstown Motors Corp. RIDE, -11.03% stock to the equivalent of sell, with a price target of $2. That represents a downside of around 60% from Tuesday's share price. Lordstown has worked a deal with the parent of Taiwan's Foxconn Technology Group to sell its plant for $230 million, which is "less than (one fifth) of our prior plant value estimate," Jonas said in a note. The analyst is also presuming that Lordstown's electric pickup truck "is not commercially viable," he said. Lordstown is negotiating a contract manufacturing agreement with Foxconn to make the Endurance and perhaps other models on a new platform. "We had previously assumed the Endurance project would be cancelled as we do not see a path to commercial viability at any appreciable scale," Jonas said. 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," he said. Lordstown announced the deal with Foxconn last week, lifting the stock then. Lordstown stock is down nearly 73% for the year, contrasting with an advance of around 16% for the S&P 500 index. SPX, +1.37% |
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