The company’s chief executive and chief financial officer will step down following an independent investigation following allegations from Hindenburg Research.
That’s never a good sign to see the top officers of a company walk away.
A few months ago, Hindenburg had alleged that the company had “no revenue and no sellable product” and that Lordstown had “misled investors on both its demand and production capabilities.”
That follows the company’s report from a few weeks ago where it said production would be sharply lower than previously expected.
And that was after Wolfe Research downgraded the stock and assigned a $1 price target.
There’s too many question marks with this one and too many red flags. It’s reminiscent of Nikola (NKLA) - Get Report. Particularly when NIO (NIO) - Get Report, Tesla (TSLA) - Get Report and Ford (F) - Get Report are all available investments.
Trading Lordstown Motors
I don’t know if Lordstown will go to $1 or if it will get swept up in a meme stock rally and surge higher.
Quite frankly, it doesn’t really matter. There are too many red flags to feel comfortable in this stock. Like Monday morning, investors could walk into the stock being down 20%. On the flip side, shorts could wake up to shares up by 20%.
With Monday’s dip, Lordstown stock is now below all of its major moving averages. It’s also below uptrend support (blue line).
This decline feels intentional. What I mean by that is, the stock could have held the 50-day moving average and uptrend support. But the stock opened below this area, rallied to it and then failed to reclaim it.
Investors are deliberately keeping it below this area, which doesn’t bode well for bulls.
Back above the 50-day and perhaps Lordstown can close the recent gap and stay above $10.
As it stands now, watch last week’s low at $8.88. Below it could create a flush down to $7.50. Below that and the May lows are in play around $6.70.