Lordstown Motors’ stock is collapsing. Here’s why.

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It’s been a tough race lately for

Lordstown Engines

– and it doesn’t get any easier.

On Monday evening, Morgan Stanley analyst Adam Jonas downgraded shares of Lordstown (ticker: RIDE) to sell from Hold. He reduced his price target to $ 2 per share from $ 8.

Lordstown stock is 8.8% at $ 5.34 Tuesday morning.

S&P 500
and

Dow Jones Industrial Average
Futures are both up around 0.8% and 0.7%, respectively.

The new thing that worries Jonas is the company’s planned sale of its Ohio manufacturing plant to

Hon Hai Precision Industry

(2317.Taiwan) —better known as Foxconn. The proposed $ 230 million cash payment is less than 20% of the plant’s value, according to the analyst.

Lordstown sells the factory because it needs the money to bring its electric truck called Endurance to the market. Limited production of the truck is expected to begin at the end of 2021. Lordstown’s cash balance at the end of the third quarter is about $ 225 million, compared to about $ 366 million at the end of the second quarter.

At the start of the day, stocks are down about 37% in the past three months and about 70% since the start of the year. Additionally, stocks fell about 82% from their 52-week high of nearly $ 32 in early February.

In early February, Wall Street was much more optimistic about the title. Three of the five analysts covering the stocks rated them Buy. The average analyst price target was $ 31.60.

Today, six of the nine analysts, or 67%, are evaluating the sale of the shares. The average sell rating ratio of S&P 500 stocks is less than 10%. The average analyst price target fell to $ 5.

Several things have shaken Wall Street’s confidence. Since February, the company has lowered its vehicle production forecast for 2021, said it would need more cash to fund the development of its truck program, was targeted by a short seller and replaced the high direction.

Write to Al Root at [email protected]