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.
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Lordstown Motors  (RIDE) - Get 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 Report, which sported a ridiculous $24 billion market cap at one point - about the size of Ford  (F) - Get Report at the time.

Other EV stocks like Tesla  (TSLA) - Get Report and NIO  (NIO) - Get 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.

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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.