Lordstown Motors’ Cash Crisis Eclipses Recent Meme-Stock Status

Lordstown Motors’ Cash Crisis Eclipses Recent Meme-Stock Status

(Bloomberg) -- Lordstown Motors Corp. posted its biggest two-day decline since October after the electric-vehicle startup said its current level of cash may not be sufficient for it to stay in business.

The shares doubled last year as investors dazzled by Tesla Inc.'s gains sought the next winner in the space, benefiting companies like Lordstown, which commanded a $5 billion market valuation just four months ago. That value has plunged to $1.78 billion as of Wednesday, as a newfound fandom among retail traders was eclipsed by its going-concern warning.

“This is a valuable lesson for investors,” Bespoke Investment Group said in a note. While betting on such early stage companies can hold the potential for high payoffs, “investors need to be aware that their positions could be effectively vaporware.”