Lordstown Motors Reaches Deal to Raise $400M Capital

Lordstown Motors (RIDE) has reached a deal with Yorkville Advisors Global’s YA II PN fund to raise as much as $400 million in new capital through an equity investment.

YA II PN agreed to purchase more than 35 million Lordstown shares from time to time over the next three years. That would give the fund an approximate 19.9% stake in the electric vehicle company. The fund will buy the shares for at least $7.48 a share.

Lordstown plans to use the money raised from YA for “working capital and general corporate purposes.” The company will determine when to sell its shares to YA. The decision to sell will be based on factors such as market conditions and the stock price. The fund will be obligated to buy the shares whenever Lordstown wants to sell.

For agreeing to the deal, Lordstown has committed to issuing an additional 371,287 shares to YA on top of the shares the fund will purchase. At the same time, the fund has pledged not to short Lordstown stock during the period agreed. (See Lordstown stock charts on TipRanks).

Bank of America analyst John Murphy recently reiterated a Hold rating on Lordstown stock but lowered the price target to $11 from $13. Murphy’s new price target suggests 50.89% upside potential.

The analyst expects second-quarter results to beat estimates across the board but sees low expectations and outlooks for the automotive industry. Murphy also noted that the chip shortage that has been a drag on sales is building up future demand.

Consensus among analysts is a Moderate Sell based on 1 Buy, 3 Holds, and 4 Sells. The average Lordstown price target of $8.71 implies 19.48% upside potential to current levels.

TipRanks data shows that financial blogger opinions are 51% Bullish on RIDE, compared to a sector average of 71%.

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