Lordstown Motors Soars as Truck Orders Pick Up

Lordstown Motors Corp. (RIDE) shares jumped 25.98% Monday after the electric truck maker said it had seen strong demand for its all-electric Endurance pickup.

The company told investors that it has nonbinding reservations for 50,000 vehicles from commercial buyers. Lordstown plans to commence production of its pickup in September 2021 before ramping up operations throughout 2022. “We continue to make significant progress across all fronts, and we are excited to reveal these developments with the investment community and future customers today,” CEO Steve Burns said in a press statement cited by Barron’s.

Unlike many other players in the EV space, the company has its own production facilities after purchasing a large manufacturing plant from General Motors Company (GM) in 2019. Last month, the truck maker completed its merger with special-purpose acquisition company (SPAC) DiamondPeak Holdings before its Nasdaq debut on Oct. 26. The deal provides roughly $675 million in proceeds, which the company will use through the initial production phase, according to Burns.

Through Monday’s close, Lordstown Motors stock has a market value of $3.72 billion and trades 126.63% higher on the year. However, over the past month, the shares have pulled back slightly, declining 2.08%.

Wall Street View

Given the company’s recent listing, few analysts have commenced coverage of its stock. Currently, it receives 1 ‘Buy’ rating from  BTIG analyst Gregory Lewis who initiated his call with a 12-month price target of $50. This implies a further 122% gain from yesterday’s $22.55 closing price.

Lewis expects Lordstown to generate about $3.3 billion in sales by 2023, meaning its stock trades at around 0.8 times estimated 2023 sales. By comparison, EV market leader Tesla, Inc. (TSLA) trades at roughly six times projected 2023 sales. Look for more broker ratings over the coming months as analysts fine-tune their valuations and get a better understanding of the incoming Biden administration’s policies relating to EV companies.

Technical Outlook and Trading Tactics

After bottoming out below $13.50 near the 200-day simple moving average (SMA) shortly after its Nasdaq listing, the share price has rallied sharply. The bullish momentum continued Monday, with buyers bidding the stock above a short-term downtrend line on heavy volume.

Active traders who enter at these levels should look for a move back to the stock’s all-time high (ATH) at $31.80 while placing a stop-loss order either at the midway point of yesterday’s wide-ranging day or beneath the session low, depending on risk tolerance.

For a look at today’s earnings schedule, check out our earnings calendar.