Rachit Vats, Author at Elite Stock Chat

Author: Rachit Vats

RIDE – Lordstown Motors Debut Earnings Report Gets Clouded In SEC Inquiry Reveal

Written by Rachit Vats on March 18, 2021. Posted in RIDE, Stock Report.

Lordstown Motors Corporation (NASDAQ: RIDE) CEO Steve Burns on Wednesday told investors during a post-earnings call that the company is cooperating with an information request from the SEC related to accusations of misleading claims by a short seller.

What Happened: Shares of the electric startup fell 3.25% in after-hours trading on Wednesday after the reveal. On Friday, short seller Hindenburg Research released a report accusing Ohio-based Lordstown Motors of using “fake” orders to raise capital and the progress it was making toward producing its first model.

The short-seller has a short position in the electric vehicle startup, which means it stands to profit if the company’s share price declines.

Lordstown Motors on Wednesday announced its first quarterly results since going public. The company reported a net loss of $38.2 million on $38.5 million in operating costs for the fourth quarter.

In his opening remarks, Burns revealed the SEC request to investors.

“We are aware of the short seller’s report. We’ve also received a request for information from the SEC, and we are cooperating with that inquiry,” said Burns.

“In addition, the board of directors has formed a special committee to review these matters.”

Why It Matters: Hindenburg’s report called Lordstown’s order book a “mirage” and said the company paid an outside consultant to generate pre-orders before its deal to go public last year. It cited documents and conversations the firm said it had with former employees and business partners.

Burns has previously said the report contained half-truths and lies.

Lordstown reiterated plans to begin producing its Endurance electric pickup truck in September as planned, with a plan to build its test vehicles by March.

Price Action: Shares of Lordstown were down 3.25% at $14.6 in after-hours trading on Wednesday and have fallen about 13% since March 12.

Photo courtesy: Trump White House Archive via Flickr

GE – General Electric Commits To Cutting Debt By 35% Within 3 Years

Written by Rachit Vats on March 18, 2021. Posted in GE, Stock Report.

General Electric Co (NYSE: GE) on Wednesday told investors more debt reduction is on the way and offered clarity on the company’s plans to manage and reduce debt by 2023.

What Happened: The U.S. industrial conglomerate last week reiterated its 2021 forecast and announced a deal to sell its jet-leasing business to Ireland’s AerCap Holdings NV (NYSE: AER) as part of ongoing efforts to pare its debt. Shares however fell as investors remained unconvinced by the turnaround efforts. On Wednesday, GE provided more clarity on its plans to soothe investor nerves, sending shares up.

GE had a total of $104 billion debt at the end of 2020, including at both its industrial business and GE Capital. The Boston-based conglomerate said it aims to bring down its total debt to about $70 billion by the end of the year following the close of the GECAS/AerCap deal.

The company then plans to pay down an additional $25 billion in debt. By about 2023, total debt should fall to about $45 billion, the company told investors at the Global Industrials Conference.

GE’s net debt to EBITDA ratio will still be about six times at the end of the year after it closes the deal and high when compared with industry peers. However, by 2023, it aims to bring that ratio under 2.5 times helped by an economic recovery, debt paydown, and about $10 billion to $15 billion in cash that it plans to keep on its balance sheet.

Why It Matters: Since taking over as CEO in October 2018, Larry Culp has taken a series of steps including selling assets, slashing dividend to just a penny to improve the struggling industrial conglomerate’s humongous debt, improve its cash position and simplify the company’s structure as it focuses on its core businesses that include power, aviation, renewables and healthcare.

Price Action: Shares of GE, which fell 6% last week on its Investor Day, closed up 3.5% at $13.61 on Wednesday.

Photo by Chuck Miller on Flickr

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