Skip to main content

Will Lordstown Motors Make New Lows After Earnings Miss?

Lordstown Motors is trading lower after missing on earnings. Here's a look at the charts.

Lordstown Motors  (RIDE) - Get Lordstown Motors Corp. Report isn’t having a great day. Despite a solid bounce from the lows and currently trading near the session highs, the stock has dropped 11% on Tuesday.

The decline came after the company reported its quarterly results, which reiterates the risk of some of these newer companies.

The electric vehicle company lost 72 cents a share, more than double what analysts were expecting. There was no revenue in the quarter, which underscores why the stock is down more than 80% from its February high.

A production cut doesn't help, either. 

In reality, it never deserved to trade that high. That’s why the SPAC space drew so much criticism from investors since these firms generated billion-dollar valuations despite having no sales and operating at a loss.

Lordstown still sports a market cap of $1.5 billion. At its highs, the company was worth more than $5 billion. We’ve seen this play out with other companies too, like Nikola  (NKLA) - Get Nikola Corporation Report, which sported a ridiculous $24 billion market cap at one point - about the size of Ford  (F) - Get Ford Motor Company Report at the time.

Other EV stocks like Tesla  (TSLA) - Get Tesla Inc. Report and NIO  (NIO) - Get NIO Inc. American depositary shares each representing one Class A 蔚来汽车 Report have been under pressure too, but at least these stocks have a real business to fall back on. Lordstown doesn’t. At least not yet.

Ford is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells F? Learn more now.

Scroll to Continue

TheStreet Recommends

Trading Lordstown Motors

Daily chart of Lordstown Motors stock.

Daily chart of Lordstown Motors stock.

Many growth stocks topped out in mid-February and have since been stuck in a painful bear market.

The high-quality names have come in about 40%, while some of the lower quality stocks have seen much larger declines. One can see just how large of a decline Lordstown has suffered over the last few months.

After being rejected by the 50-day and 10-week moving averages, the stock is gapping down on Tuesday.

While it’s off the lows - both for the session and for the month - Lordstown still looks vulnerable.

On the upside, shares need to reclaim the 10-day and 21-day moving averages. If it can do so, the gap-fill at $9.30 is in play, followed again by the 50-day and 10-week moving averages.

Above all of these measures puts the May high in play at $11.65.

On the downside, if Lordstown Motors stock takes out Tuesday’s low, the $6.69 lows are back in play.