Lordstown Mulls Multiple Options for Reverse Stock Split

Struggling commercial EV maker Lordstown Motors Corp. is considering a reverse stock split to stave off being delisted from the NASDAQ stock exchange.

NASDAQ rules state a stock that remains below $1 per share for 30 consecutive trading days may be delisted from the exchange. Lordstown last traded above $1 in early March, putting them in the crosshairs, , according to a report by Reuters. 

The company has until Oct. 16 of this year to bring its share price up above the minimum level, or it could be consigned to “Penny Stock” Over-The-Counter (OTC) trading. 

At press time, Lordstown stock was trading at $0.48 per share. A 3-for-1 reverse split would be the minimum necessary to maintain the stock’s presence on the NASDAQ exchange. Reuters reports the company is considering reverse split ratios from 3-for-1 all the way up to 15-for-1. 

Increased partnership with Foxconn

The company has been expanding its partnership with Taiwan-based Foxconn, including a direct investment of $170 million by Foxconn into Lordstown common stock. The company reported in March the initial Foxconn funding consisted of $22 million of Lordstown Motors Class A common stock to be used for general corporate purposes.

It also included $30 million of Series A preferred stock limited to funding development and design activities for a new electric vehicle program in collaboration with Foxconn and its EV ecosystem as well as related overhead. The remaining investment of up to $117.3 million consists of $47.3 million in common stock and up to $70 million in preferred stock. 

Upon completion of the investments, Foxconn is expected to hold all of Lordstown’s outstanding preferred stock and nearly 18% of Lordstown common stock, and it will have the right to designate two members to be added to LMC’s board of directors.

Additionally, Foxconn will collaborate and provide key components to Lordstown’s next vehicle platform, with parts coming from Foxconn’s Ohio-based EV plant. 

“Our asset-light business model and collaboration with the Foxconn EV ecosystem will provide the opportunity for Lordstown Motors to create winning EVs that are tailored to the needs of customers that use them for various work applications, while gaining the cost benefits of scale,” said Edward Hightower, Lordstown Motors’ CEO & president.

Foxconn already owns the physical Lordstown plant. The company acquired the old GM plant in Lordstown, Ohiofrom Lordstown Motors, and has already revealed three in-house design prototype EVs designed for the U.S. market.  

Further, both Foxconn and Fisker Inc. have confirmed the upcoming Fisker PEAR (Personal Electric Automotive Revolution) will be manufactured at the Lordstown facility beginning in 2024, with a planned output of 250,000 vehicles per year. Fisker has announced a starting price of $29,990 for the PEAR, and that’s before any tax incentives have been applied.

Stop and go customer deliveries

Lordstown began commercial sales of its Endurance electric truck in the fourth quarter of 2022, but halted sales when the company discovered several performance and quality issues with the vehicles coming off the production line and vehicles in process. Some of these issues were discovered by suppliers, and some were experienced by early customers. 

Because of the issues, Lordstown voluntarily recalled its vehicles to address supplier quality issues. Since that time, Lordstown has been working with suppliers on root cause analysis and potential solutions. 

As of the March 6 financial report, approximately 40 Endurance vehicles were completed or were in process and the company had sold a total of six vehicles out of a planned initial production run of up to 500 units. Regular production and deliveries resumed in April and are expected to continue at a very slow pace for the near term.

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• Source: https://www.thedetroitbureau.com/2023/04/lordstown-mulls-multiple-options-for-reverse-stock-split/