Advertisement
Canada markets open in 1 hour 28 minutes
  • S&P/TSX

    21,516.90
    -94.40 (-0.44%)
     
  • S&P 500

    5,487.03
    +13.80 (+0.25%)
     
  • DOW

    38,834.86
    +56.76 (+0.15%)
     
  • CAD/USD

    0.7293
    -0.0004 (-0.06%)
     
  • CRUDE OIL

    81.73
    +0.16 (+0.20%)
     
  • Bitcoin CAD

    90,711.19
    +1,321.37 (+1.48%)
     
  • CMC Crypto 200

    1,375.50
    -7.16 (-0.52%)
     
  • GOLD FUTURES

    2,352.30
    +5.40 (+0.23%)
     
  • RUSSELL 2000

    2,025.23
    +3.22 (+0.16%)
     
  • 10-Yr Bond

    4.2170
    0.0000 (0.00%)
     
  • NASDAQ futures

    20,024.75
    +105.50 (+0.53%)
     
  • VOLATILITY

    12.59
    +0.11 (+0.88%)
     
  • FTSE

    8,233.17
    +28.06 (+0.34%)
     
  • NIKKEI 225

    38,633.02
    +62.26 (+0.16%)
     
  • CAD/EUR

    0.6801
    +0.0014 (+0.21%)
     

Lordstown Motors Corp. stock plummets following dispute with Foxconn

Yahoo Finance Live discusses a drop in Lordstown Motors Corp. shares following a reported dispute with Foxconn.

Video Transcript

PRAS SUBRAMANIAN: But Lordstown kind of on the way down here. I'm watching Lordstown Motors.

ALEXANDRA CANAL: Big way down.

PRAS SUBRAMANIAN: They are going down. Well, we'll see. The EV maker hitting a new low today after the company said it's in danger of going bankrupt. Why? Its partner, Foxconn, is threatening to withhold important funding because Lordstown received a delisting notice from the NASDAQ, which is a breach of contract between the two.

Now, Lordstown says Foxconn isn't making good-- making a good faith effort to follow through on its deal here to make a low-cost EV, but the fact of the matter is, if Foxconn withholds payment, Lordstown will likely go-- likely to ceasefire operation and file for bankruptcy protection. So, not looking good there. Shares well below $1 for Lordstown.

ADVERTISEMENT

ALEXANDRA CANAL: Yeah, and this is just not a good story. I'm going to read a quote from the filing because this just paints the dismal picture. Lordstown alleging that without this deal, quote, "the company will be deprived of critical funding necessary for its operations." "Critical funding necessary for operations," that just does not sound good.

And then if you take a look at the stock, it's down 70% year-to-date, more than 85% year-over-year. It just seems like shareholders were really looking at this agreement to help boost shares, to help save this company.

Now, we have that threat of bankruptcy and it comes after the company lost $100 million in the fourth quarter alone. So, not a good sign at all. But Lordstown did say that it expects Foxconn to hold up its end of the bargain. And if it does not, then they are going to seek other alternatives, both legal and financial.

- Yes, certainly they said that they were seeking those two alternatives, if in fact they were faced to make that decision. And Lordstown is really hoping that Foxconn holds up its end of the deal because Allie, you mentioned that massive drop that we've seen within the share price here. It's been trading under $1 since March. We also know that in February they announced that they were halting future production here, future EVs production, and also just in terms of deliveries of those future EVs.

It's in a very tough spot. And I'm curious just to get your take on this, just its ability to succeed at this point, given the fact that competition is becoming even stronger here. They're losing any sort of footprint that they had in the market, and investors are finding a lot of other names to get excited about.

PRAS SUBRAMANIAN: I mean, and they had some first mover status there, but they sold their factory to Foxconn. Foxconn owns their factory. So, if they can't get them on board, I don't know where they're going to build these Endurance pickups. This is a big problem for them.

They had about $200 million in cash at the end of the quarter, but they've already burned through 100 million last quarter. So. This is a tough spot for them. They need that money to get those EVs out the door.