Long-term investors of electric vehicle (EV) manufacturer Lordstown Motors (NASDAQ:RIDE) have a lot of catching up to do. There’s a chance that RIDE stock will recover, but it will take a while. Think in terms of years, not months.
As you’re surely aware, Lordstown Motors has a lot of competition in the EV industry. You may also have heard about the potential conflict between Lordstown and fellow EV maker Workhorse (NASDAQ:WKHS).
What Lordstown Motors’ loyal shareholders need in 2023 is a positive catalyst — a piece of good, company-specific news. So far, however, Lordstown seems to indicate slow growth and a long, winding road to recovery.
What’s Happening With RIDE Stock?
Despite Lordstown Motors’ potential problem with Workhorse, RIDE stock moved higher in early 2023. However, it’s premature to claim that the stock has recovered, as it’s a long way from its previous peak of above $20.
If the Lordstown Motors share price falls below $1, this could pose a major problem. That’s because the Nasdaq exchange has sometimes been known to delist stocks that trade below $1 for a prolonged period.
Therefore, Lordstown needs to demonstrate growth and improvement as soon as possible. Financially, Lordstown Motors has to demonstrate its viability. In the company’s most recently released quarterly report, Lordstown indicated zero net sales and a dwindling cash and cash equivalents position.
Lordstown Motors’ Production Volume Will ‘Ramp Slowly’
If you’re looking to invest in an EV manufacturer that’s already producing vehicles on a large scale, Lordstown Motors, unfortunately, doesn’t fit the bill. For the remainder of 2023, it’s unlikely that Lordstown will achieve profitability as the automaker is still struggling to produce its vehicles.
Granted, Lordstown Motors has achieved some notable milestones. In 2022’s third quarter, Lordstown commenced commercial production of the company’s Endurance electric pickup truck. Then, the Endurance full-size truck “achieved full homologation, a key condition to start sales.”
Yet, there are still obstacles to overcome. In particular, Lordstown has to deal with supply chain issues, “particularly with respect to the availability of hub motor components.”
Thus, progress won’t happen quickly. Lordstown Motors acknowledges that its vehicle “production volume will ramp slowly.” There’s also a note of hope from the company, though, as Lordstown expects its EV production to “accelerate as we resolve supply chain constraints.”
So, Will RIDE Stock Ever Recover?
The situation isn’t hopeless, but staying the course with Lordstown Motors will require patience. The EV industry is highly competitive, and Lordstown is playing catch up while bigger automakers zoom ahead.
I do expect RIDE stock to recover eventually, but let’s be realistic. Getting the share price back to above $20 in 2023 isn’t realistic. It’s possible in a few years, though. So, check back to see if Lordstown Motors manages to overcome supply chain constraints and significantly increase its EV production.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.