Short Seller Takes Aim at Another EV Maker
Not all EVs are built the same in market.
2 min
Many new electric-vehicle start-ups have no sales and big aspirations. Electric truck maker Lordstown Motors is one of them. The company doesn’t sell EVs yet, but expects to start selling its all-electric truck called Endurance later in 2021. After the launch, Lordstown projects explosive growth off its 2021 base in 2022 and beyond.
One short seller, however, isn’t buying it.
On Friday morning, Hindenburg Research published a negative research report about Lordstown Motors (ticker: RIDE). The report makes several claims, notably that not all of the preorders the company has claimed are real.
The report is hitting the stock. Shares are down 20%, at $14.18, in Friday morning trading. The S&P 500, by comparison, is down 0.5%. The Dow Jones Industrial Average is up 0.5%.
On Jan. 11, Lordstown reported more than 100,000 preorders for its Endurance pickup truck launched this past summer. Hindenburg claims in its report that it has talked to some Lordstown preorder customers, and points out some it found that don’t have the cash to buy ordered trucks and that preorders don’t carry a commitment to purchase or a penalty to cancel.
Lordstown wasn’t immediately available to comment on the Hindenburg report.
Preorders in the EV industry are fairly common. Tesla (TSLA), when it launched its Cybertruck, regularly reported preorders. Tesla racked up hundreds of thousands in vehicle preorders before it stopped reporting the number. A Cybertruck could be reserved for US$100, which is fully refundable.
Hindenburg is the firm that published a negative research report about electric- and hydrogen-powered trucking company Nikola (NKLA) back in September 2020. Hindenburg alleged Nikola management misled investors. Nikola denied the claims. The report, however, led to the departure of company founder Trevor Milton.
An internal investigation conducted by an outside firm at the behest of Nikola followed and, as a result, the company disclosed in its annual report nine statements made by Miltion which may have been partially untrue.
At the time of the report, Hindenburg was short Nikola stock, betting that its price would decline. Now, Hindenburg is short Lordstown stock and stands to gain as it falls.
Lordstown became a publicly traded company in 2020 after merging with a special purpose acquisition company. The company, founded by Steve Burns, purchased an Ohio plant from General Motors (GM) to kick-start its growth plants.
The company projects more than $100 million in sales for 2021, growing to $1.7 billion in sales in 2022 and then to $5.8 billion by 2024. Vehicle deliveries over that span are projected to go from 2,200 in 2021 to more than 100,000 in 2024.
Lordstown will report fourth-quarter results on March 17 after the market closes. Investors and analysts will have a chance to hear from management then.
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New research suggests spending 40 percent of household income on loan repayments is the new normal
3 min
Requiring more than 30 percent of household income to service a home loan has long been considered the benchmark for ‘housing stress’. Yet research shows it is becoming the new normal. The 2024 ANZ CoreLogic Housing Affordability Report reveals home loans on only 17 percent of homes are ‘serviceable’ if serviceability is limited to 30 percent of the median national household income.
Based on 40 percent of household income, just 37 percent of properties would be serviceable on a mortgage covering 80 percent of the purchase price. ANZ CoreLogic suggest 40 may be the new 30 when it comes to home loan serviceability. “Looking ahead, there is little prospect for the mortgage serviceability indicator to move back into the 30 percent range any time soon,” says the report.
“This is because the cash rate is not expected to be cut until late 2024, and home values have continued to rise, even amid relatively high interest rate settings.” ANZ CoreLogic estimate that home loan rates would have to fall to about 4.7 percent to bring serviceability under 40 percent.
CoreLogic has broken down the actual household income required to service a home loan on a 6.27 percent interest rate for an 80 percent loan based on current median house and unit values in each capital city. As expected, affordability is worst in the most expensive property market, Sydney.
Sydney
Sydney’s median house price is $1,414,229 and the median unit price is $839,344.
Based on 40 percent serviceability, households need a total income of $211,456 to afford a home loan for a house and $125,499 for a unit. The city’s actual median household income is $120,554.
Melbourne
Melbourne’s median house price is $935,049 and the median apartment price is $612,906.
Based on 40 percent serviceability, households need a total income of $139,809 to afford a home loan for a house and $91,642 for a unit. The city’s actual median household income is $110,324.
Brisbane
Brisbane’s median house price is $909,988 and the median unit price is $587,793.
Based on 40 percent serviceability, households need a total income of $136,062 to afford a home loan for a house and $87,887 for a unit. The city’s actual median household income is $107,243.
Adelaide
Adelaide’s median house price is $785,971 and the median apartment price is $504,799.
Based on 40 percent serviceability, households need a total income of $117,519 to afford a home loan for a house and $75,478 for a unit. The city’s actual median household income is $89,806.
Perth
Perth’s median house price is $735,276 and the median unit price is $495,360.
Based on 40 percent serviceability, households need a total income of $109,939 to afford a home loan for a house and $74,066 for a unit. The city’s actual median household income is $108,057.
Hobart
Hobart’s median house price is $692,951 and the median apartment price is $522,258.
Based on 40 percent serviceability, households need a total income of $103,610 to afford a home loan for a house and $78,088 for a unit. The city’s actual median household income is $89,515.
Darwin
Darwin’s median house price is $573,498 and the median unit price is $367,716.
Based on 40 percent serviceability, households need a total income of $85,750 to afford a home loan for a house and $54,981 for a unit. The city’s actual median household income is $126,193.
Canberra
Canberra’s median house price is $964,136 and the median apartment price is $585,057.
Based on 40 percent serviceability, households need a total income of $144,158 to afford a home loan for a house and $87,478 for a unit. The city’s actual median household income is $137,760.
Just 55 minutes from Sydney, make this your creative getaway located in the majestic Hawkesbury region.
This stylish family home combines a classic palette and finishes with a flexible floorplan
