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Daily Scoop

Lordstown Is Out of Track

By Mon, Jul 5, 2021

Hey Scoopers,

After data from the Labor Department showed an acceleration in monthly hirings, the stock market ended the week with positive returns. — More on that in the “Overall Market” section.

Beyond the overall market, a space tourism pioneer’s founder announced he would go to space before anyone else can do it. Meanwhile, an EV maker recently made so many bad headlines that we needed more than one section to talk about it. — More on that in the “What’s Up?” and “What’s Down?” sections.

By the way, the Justice Department is not the only institution investigating Lordstown’s business. — More on that in the “Water Cooler” section.

But, first, here is a recap of what happened in the market yesterday:

  • U.S. markets: The stock market ended in the green zone on Friday. Scroll down to the “Overall Market” section to read more.
  • Cryptocurrency: Bitcoin‘s price stayed at $33K per coin.

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Better Than Expected

The stock market ended the week’s last session in the green zone.

After the U.S. Labor Department released its June jobs report on Friday, the markets rejoiced in a stronger-than-expected acceleration in monthly hirings. Although the unemployment rate slightly increased to 5.9%, the added payrolls saw gains for the sixth month in a row. Furthermore, the S&P 500 logged its seventh straight day of consecutive returns for the longest winning streak since August 2021.

Billionaire Space Race

So, what happened?

Shares of Virgin Galactic (Ticker: SPCE) were up by more than 4% on Friday. After Jeff Bezos announced he would fly to space aboard Blue Origin’s spaceship, Virgin’s founder Richard Branson stated he would go to space first. Although the space tourism pioneer’s stock has recently faced high volatility, having its founder onboard could give investors the impression that Virgin’s project is solid enough for future passengers.

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One More Bad News

So what happened?

Shares of Lordstown Motors (Ticker: RIDE) were down by more than 10% on Friday. Besides the bad news related to its CEO and CFO resigning that Lordstown recently had to share with investors, now the U.S. Department of Justice probes the company. Although the Wall Street Journal’s article didn’t include deeper details, analysts believe the inquiry is around the electric truck maker admitting it exaggerated the number of pre-order for its Endurance pickup. The announcement came only a few days after Lordstown’s board started an inside investigation. Continue below.

Lordstown is Out of Track

So what happened?

The U.S. attorney’s office in Manhattan is handling the inquiries into Lordstown (Ticker: RIDE). Even though sources stated the company committed to collaborating with the investigations, its already damaged image became even more fragile. Along with the Justice Department, the Securities and Exchange Commission is also looking into Lordstown’s business. Before the company went public, the SEC issued subpoenas regarding the electric truck maker preorders in anticipation of its IPO. The reported investigation adds to a pile of recent scandals involving the company, driving investors’ confidence away from it.

Although nothing is impossible, it is becoming harder to draw a bull case for Lordstown under the current circumstances.

If you have any questions, or suggestions let us know by emailing us at members@tradestocks.com. We look forward to hearing from you.

About the Author

Felipe Nebesnyj is an Economics student who is passionate about the stock market and investing in the market. Originally from Brazil, he is working and studying in the U.S. and started learning about and researching the stock market at 16. Before joining Stock Card, Felipe worked on multiple stock market research projects that gave him the necessary knowledge and confidence to put into his stock market analyst career at Stock Card. Last but not least, he is an excellent violinist and enjoys video games.