Lordstown Motors (NASDAQ:RIDE) ticker officially debuted on Wallstreet yesterday after the completion of its reversed merger with DiamondPeak Holdings (SPAC). The company received $675 million from the SPAC in funding to bolster their manufacturing and distribution of their EV Pickup truck model “Endurance”. Lordstown Motors gained national attention after President Trump had viewed the pick up truck at the White House in September. The company founded by Workhorse (NASDAQ:WKHS) previous CEO Steve Burns has set sail to commercialise the first EV pick up truck available on the market. This article will breakdown the Lordstown forecasts 2021 and beyond.
What are the expectations for RIDE moving into 2021?
After the reverse merger on Monday, investors have rallied behind the EV fleet manufacturer. The company plans to begin manufacturing the Endurance truck in 2021. Lordstown have also received 40,000 pre-orders totalling to an estimated $2 billion in revenue. The first pre-orders are on track to commence delivery in September of 2021. This suggests RIDE will begin to see a dramatic spike in revenue as we enter the latter half of 2021.
“We have evaluated hundreds of companies for more than a year and Lordstown stood out as a differentiated, high growth company at the confluence of electric vehicles and light-duty trucks, two highly valuable areas of focus and tremendous opportunity in the automotive sector.”
David Hamamoto, Chairman and Chief Executive Officer of DiamondPeak
Breaking down the revenue forecasts for Lordstown Motors
These pre-orders are not binding and can be cancelled at anytime until the delivery date in 2021. Although a positive sign of strong demand for long term shareholders, the risk associated is a text book example of risk reward. The company noted the initial 14,000 preorders will be enough to fill their production capacity for the first year. Assuming the company can fulfil half these orders in the financial year 2021-22, the company will be on target to turnover north of a billion in gross revenue.
The Endurance pickup truck will retail for $52,500 and will be assisted by a U.S. tax credit of up to $7,500. Lordstown motors expects operational-earnings margins to break-even in 2022, its first full year of production, and surpass 10% by 2024. Based on these findings its clear why investors are keen on Lordstown’s 2021 revenue forecasts.
“Since its unveiling just over a month ago, the Endurance has been met with enthusiastic support, and to date, we have secured $1.4 billion of pre-orders. Our platform is rooted in sustainability, and the entire Lordstown team is committed to ensuring we contribute to a healthier planet for generations to come.”
Steve Burns, Founder and Chief Executive Officer of Lordstown, read full statement here.
CNBC Interview with Lordstown Motors
Assessing the risk
Merged EV companies such as Hyliion have taken a hit on Wallstreet. This has caused some concern surrounding the suitability of the growing EV industry. There is a growing range of listed EV companies now on the market. Lordstown will need capitalise on their expected timelines for operations to please long term shareholders. Any delay or hitch in the timing will have a serious impact on the stock price.
The time between now and the latter half of this year will likely test the sentiment of long term shareholders. The initial wave of investment in EV companies has begun to slow, with companies such as Workhorse and Hyliion struggling to match their August/September moving averages.
Summary on Lordstown’s Forecast for 2021
In conclusion, Lordstown Motors has exciting prospects moving into the second half of 2021. If the company can stick to their plans without delays there is no doubt the revenue surge will see strong investor backing. The long term opportunity looks promising however there is no reward without risk.
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