Lordstown Motors Still Has a Very High Level of Short Interest

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Short selling data can help investors avoid catastrophic losses. Short sellers are high-conviction traders. If they are shorting a stock, it’s generally because they see significant downside risk.

In this report, we are going to look at the short interest data on Lordstown Motors Corporation (RIDE:US). Lordstown Motors is an automotive company that offers an all-electric pickup truck – the ‘Endurance’. The company is listed on the Nasdaq and currently has a market cap of around $81.92 million.

Lordstown Motors’ Short Interest

The short sellers have had great success with this stock in the past. Back in January, we noted that short interest here was very high. Since then, the stock has fallen about 70%.

It seems that the short sellers are not done with the stock yet, however. We say this because currently, 50.94 million RIDE shares are on loan. That represents about 28.98% of the free float.

Utilization is 100% which indicates that short sellers have shorted all shares available for lending. And the cost to borrow is elevated at 8.67%, which indicates a high demand for the stock on the short side.

Major Challenges

It’s not hard to see why the short sellers are targeting Lordstown Motors. This is a company that is facing a number of major challenges.

Back in February, the company was forced to pause production and deliveries due to quality issues.

More recently, in early May, Lordstown reported a large fall in its cash reserves and said that it might have to stop producing its Endurance truck in the near future unless it finds a partner. Days before this, the company had said it might be forced to file for bankruptcy, citing uncertainty over an $170 million investment deal with Foxconn.

Meanwhile, the company’s Q4 results were terrible. For the period, the company posted revenue of just $194,000 due to the fact it only sold three cars during the period. Operating loss amounted to $104.1 million while adjusted loss per share came in at 45 cents​​ versus analysts’ estimate of 24 cents per share.

So overall, there is a lot for the short sellers to sink their teeth into here.

Given the high level of short interest, we think caution is warranted towards the stock right now.