Startup electric-car manufacturer Lordstown Motors warned that it might be forced out of business as it is running low on cash. The company’s stock has been plummeting since then, and it could sustain further losses in the coming hours.
Lordstown Motors is going bankrupt
Lordstown Motors, an electric vehicle manufacturer in Ohio, has revealed that it could go out of business soon if it doesn’t get additional funding. The company stated that its ability to stay in business depends on completing the development of its electric vehicles, obtaining regulatory approval, starting commercial-scale production and launching the sale of such vehicles. The company can only achieve this with additional funding.
In its SEC filing, Lordstown Motors revealed that it had $259.7 million in cash left as of March 31. The company recorded a loss of $125.2 million in the past three months. When contacted by CNN, Lordstown Motors declined to comment beyond the statement in its SEC filing. The company maintains that it is focused on starting production in a few months.
Analysts have questioned the company’s viability in recent months. Hindenburg Research predicted that Lordstown Motors’ stock price would decline after questioning the validity of the contracts the company was telling investors it had.
Lordstown Motors’ stock price has taken a hit
The company’s stock price has taken a hit since it announced that it could soon go out of business. At the time of this report, Lordstown Motors’ stock price is down by 9%. The stock is currently trading at $9.86 per share, down from $15 yesterday. Overall, the stock price is down by 37% since its announcement yesterday.
The electric car industry is becoming more competitive as the traditional vehicle manufacturers are now making their way into the sector. Ford recently launched the electric version of its F-150, one of the best-selling pickups in the United States. Tesla, the leading electric car manufacturer, is also set to start production of its Cybertruck later this year. The massive competition in the electric car industry could affect the performance of startups like Lordstown Motors in both the long and short term.