Raphael Stevens

Lordstown’s near-term survival hinges on a $250 million deal to sell its Ohio factory to Foxconn that must close by next Wednesday.
Even if that deal closes on time, Lordstown will need to raise additional cash by year-end.
It hopes to begin production of its electric truck this fall, but rising costs mean it will lose money for now on every one sold.

The Lordstown Motors Corp. Endurance electric pickup truck sits on stage during an unveiling event in Lordstown, Ohio, U.S., on Thursday, June 25, 2020.
Matthew Hatcher | Bloomberg | Getty Images

Struggling electric vehicle start-up Lordstown Motors said it’s on track to begin production of its Endurance pickup in the third quarter, about a year later than originally expected. Yet even if it hits that start date, the company expects to lose money on every one of the roughly 500 trucks it hopes to ship by year-end.
Whether Lordstown will survive long enough to face that challenge is still in question. The company’s financial future hangs on a deal it struck last September to sell its Ohio factory to Taiwanese contract manufacturer Hon Hai Technology Group, better known as Foxconn. Under the deal’s terms, it must close by May 18. (The original terms required the deal to close by May 14, but the parties agreed to a four-day extension, Lordstown said Monday.)

If the deal doesn’t happen – as of Monday morning, it wasn’t done – Lordstown will be required to refund the $250 million in down payments made by Foxconn over the last several months.
A refund would deplete nearly all of the aspiring truck maker’s remaining cash. Lordstown had $203.6 million in cash as of March 31 and received an additional $50 million from Foxconn in April. Nearly all of that will have to be repaid if the deal doesn’t happen.
If the deal does close, Foxconn will make a final payment of $30 million, plus an additional payment of about $27 million to reimburse some of Lordstown’s costs. But that will still leave Lordstown short of the cash it needs to ramp up production of the Endurance.
Assuming a successful closing with Foxconn, Lordstown will likely have to raise an additional $150 million or so by year-end, Chief Financial Officer Adam Kroll said Monday.
The news was part of Lordstown’s first-quarter earnings update. It reported a net loss of $89.6 million for the first quarter, or 46 cents per share, versus its $125.2 million loss (72 cents per share) in the first quarter of 2021. Revenue then and now was zero, as the company isn’t yet shipping vehicles.

Lordstown’s operations used up net $69 million in cash in the first quarter, including $21.9 million in capital expenses on tooling and related costs for its assembly line. Its rate of cash burn is likely to accelerate as it gets closer to the start of production of the Endurance.  
Lordstown’s stock fell nearly 19% in early trading after the news was released to a new all-time low of $1.55. The shares recovered somewhat as the day went on, ending Monday’s session at $1.78, down 6.5%.

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Peter Thiel, co-founder and chairman of Palantir Technologies Inc., pauses during a news conference in Tokyo, Japan, on Monday, Nov. 18, 2019.
Kiyoshi Ota | Bloomberg | Getty Images

Check out the companies making headlines in midday trading Monday.
Palantir – Shares of the software company dropped 21.3% after Palantir’s first-quarter earnings came in below expectations. The company reported 2 cents of adjusted earnings per share on $446 million of revenue. Analysts surveyed by Refinitiv expected 4 cents of earnings per share on $443 million of revenue. Palantir’s second-quarter guidance for revenue and adjusted operating margin was also below expectations, according to StreetAccount.

Rivian – Shares of the electric vehicle maker fell 20.9% following a CNBC report that Ford Motor will sell 8 million shares as the insider lockup for the stock is set to expire. Ford currently owns 102 million shares of Rivian. Ford shares fell 4%.
Uber – The ride-sharing company’s stock dropped 11.6% after CEO Dara Khosrowshahi revealed plans to slash marketing and incentives spending and treat hiring as a “privilege,” according to an email to employees obtained by CNBC. “It’s clear that the market is experiencing a seismic shift and we need to react accordingly,” he said.
Coty — Shares tumbled 7.4% despite an earnings beat from the cosmetics company. Coty earned 3 cents per share on revenues of $1.19 billion in its most recent quarter. Analysts polled by Refinitiv were expecting earnings of 1 cent per share on revenues of $1.15 billion. Coty also raised its full-year outlook based on strong consumer demand.
Tyson Foods – Shares of the beef and poultry producer gained 2.2% on the back of better-than-expected quarterly results. Tyson reported earnings of $2.29 per share on revenue of $13.12 billion. Analysts had expected a profit of $1.91 per share on revenue of $12.85 billion, according to Refinitiv.
BioNTech – The stock rose 3.1% after BioNTech posted a better-than-expected first-quarter report. BioNTech earned $14.24 per share on revenue of $6.37 billion. Analysts polled by Refinitiv expected a profit of $9.16 per share on revenue of $4.34 billion.

Twitter – Shares of the social media company fell 3.7% after The New York Times reported on Elon Musk’s financial goals for Twitter, citing an investor presentation. The billionaire — who is acquiring Twitter for $44 billion — aims to quintuple revenue by 2028, cut Twitter’s reliance on advertising and reach 931 million users by 2028, among other objectives set out in the presentation.
Dish Network – Shares dipped 4.5% after JPMorgan downgraded Dish to neutral from overweight, citing “weaker than expected PayTV and wireless results.” Meanwhile, Credit Suisse upgraded Dish to outperform from neutral, saying it sees “sufficient upside” for the company.
Match – Shares of the online dating company slid 4.5% after Wells Fargo upgraded the stock to overweight from equal weight. Wells said shares are “compelling” at current levels.
Virgin Galactic – Shares of Virgin Galactic pulled back by 10.7% as Truist downgraded the space travel company to hold from buy amid concerns over additional flight delays.
— CNBC’s Jesse Pound, Tanaya Macheel, Samantha Subin and Sarah Min contributed reporting.

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On Tuesday morning, Peloton is expected to report a per-share loss for its fiscal third quarter as revenue falls from year-ago levels.
The marks CEO Barry McCarthy’s first time leading the connected fitness equipment company’s quarterly conference call. Analysts will be looking for answers.
Top of mind are updates on Peloton’s cost-cutting efforts and the company’s forecast for subscriber growth.

A woman walks in front of a Peloton store in Manhattan on May 05, 2021 in New York.
John Smith | VIEW press | Corbis News | Getty Images

Analysts and investors are eager to get to know Peloton Chief Executive Officer Barry McCarthy and have him articulate his vision for the company’s future. He will have the opportunity to introduce himself to Wall Street on Tuesday.
The former Netflix and Spotify executive has been leading the connected fitness equipment maker for roughly three months since he assumed the role from the company’s co-founder, John Foley. He took over as a slowdown in equipment sales and rampant spending were weighing on Peloton’s profits.

Some of McCarthy’s efforts to bolster the company’s financials and regain investors’ confidence are already underway, as Peloton seeks new customers but also ways to make more money off of its current user base. The company recently slashed the prices of its equipment, including the Bike, Bike+ and Tread, in hopes of making the products more affordable for a bigger audience. On June 1, it plans to hike the fee for a monthly all-access subscription plan, to $44 from $39.
Under McCarthy, Peloton has also been testing a rental option in select U.S. markets, where users can pay a monthly fee of anywhere between $60 and $100 for a rented Bike or Bike+, along with access to its workout content library. It’s still unclear if this option could roll out nationwide.
“With a new CEO, no clear strategy yet, and the fundamental value proposition coming under question, there is a lot of uncertainty on what happens next with Peloton,” Bernstein analyst Aneesha Sherman wrote in a note to clients.
Peloton is expected to report Tuesday a fiscal third-quarter loss of 83 cents per share on revenue of $972.9 million, according to an analyst survey compiled by Refinitiv. That’s compared with a loss of 3 cents a share on revenue of $1.26 billion a year ago.
Here is what Wall Street will be watching for as Peloton reports its results.

Updates on cost-cutting

McCarthy knows he must cut costs in order to keep the business afloat. The jury is still out on whether Peloton’s plans will go far enough.
Roughly three months ago, the New York-based company announced a massive overhaul of its cost structure that included axing about 2,800 jobs. Peloton also said it would wind down the development of Peloton Output Park, the $400 million factory that it was constructing in Ohio.
All in, Peloton’s plans would slash about $800 million in annual costs and reduce capital expenditures by roughly $150 million this year.
Activist Blackwells Capital has contended that those cuts won’t be enough. The firm, which in late January called on Peloton to fire Foley, continues to push for the connected fitness equipment maker to sell itself to a business such as Amazon, Google or Netflix.
MKM Partners managing director Rohit Kulkarni said he expects Peloton will have to revisit its cost structure this week. The company will likely need to make additional and “somewhat painful but fiscally prudent cost-savings measures,” he said.
“How low can variable marketing spend go, and yet not have a material long-term brand impact?,” Kulkarni wrote in a note to clients. “Is Peloton planning to close stores or delay capital investments such as production studios and factories?”
Kulkarni also said he will be looking for Peloton to detail any initial reactions from consumers to the recent price drops and to the looming subscription fee hike.
Peloton has said previously that it doesn’t expect to be profitable, on an adjusted core earnings basis, until fiscal 2023.

Subscriber growth

Peloton’s forecast for subscriber growth will be in focus Tuesday, analysts say. This will allow Wall Street to gauge how much post-Covid pandemic demand remains for Peloton’s equipment and fitness content.
As of Dec. 31, Peloton reported 2.77 million connected fitness subscribers, which are people who both own a piece of the company’s hardware and pay a monthly fee to access its workout classes. It counts more than 6.6 members in total, including those people who pay for a less-costly, digital-only subscription.
Peloton previously said it expected to end its fiscal third quarter with 2.93 million connected fitness subscribers.
UBS analyst Arpine Kocharyan said in a clients note that he will be looking for Peloton’s subscriber growth targets but also, just as importantly, for any signs that current users could be ditching their memberships.
Peloton’s monthly average connected fitness churn rate, which stood at 0.79% as of Dec. 31, is a metric that allows for analysts and investors to track just that. The lower the churn, the better news for Peloton, because it means people are sticking around and still paying for content.
“What will matter more is management’s commentary on new pricing strategy, customer acquisition cost and impact on churn rates,” Kocharyan said.
The strategic rationale of a potential deal involving Peloton and a suitor also remains a key debate among investors, he added.
Peloton could become a more appealing takeover target if its shares keep falling. The stock hit an all-time low of $14.06 on Monday.
The sell-off came after The Wall Street Journal on Thursday reported that Peloton is targeting potential investors, including industry players and private equity firms, to take a stake in its business of around 15% to 20%. Peloton declined to comment on the report.

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Erling Haaland has informed Borussia Dortmund that he will leave the club at the end of the season.
Manchester City CEO Ferran Soriano informed BVB boss Hans-Joachim Watzke last week City are ready to activate the striker’s €75m release clause.

Haaland has scored 85 goals in 88 matches for Dortmund since joining from RB Salzburg in January 2020.
Matthias Hangst | Getty Images Sport | Getty Images

Erling Haaland is close to completing his move to Manchester City.
Sources in Belgium have told Sky Sports News that Haaland completed a medical at Hospital Erasme in Brussels on Monday.

According to Sky Germany, the striker has informed Borussia Dortmund he will leave the club at the end of the season. The release clause on his contract is €75m.
Manchester City CEO Ferran Soriano informed Dortmund boss Hans-Joachim Watzke last week City are ready to activate the striker’s release clause.
The clause stipulates Haaland’s transfer fee will have to be paid in one payment, unlike many of the other top transfers that happen in several instalments.
Some details are still to be finalised for the deal that is expected to be announced later this week.
Haaland has scored 85 goals in 88 matches for Dortmund since joining from RB Salzburg in January 2020. Dortmund’s last game of the season is Saturday’s home match against Hertha Berlin.

Pep Guardiola’s side have been leading the race to sign the 21-year-old and his release clause means Borussia Dortmund are resigned to losing the striker this summer. The 75m euro fee – which equates to £62m – for Haaland is widely considered to be below market value.
When asked about the club’s interest in the Norway striker last month, Guardiola responded: “[I have] no answer to your question.
“I have no concern or business in my head right now to think about what is going to happen in this club next season.”
Liverpool manager Jurgen Klopp believes the Haaland deal will “set new levels” in the transfer market.
In an exclusive interview with Sky Sports News, he said: “I signed a new contract knowing that City would not stop developing. It’s not about City to define if we can be happy or not, it’s about us and what we can make of it.

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“You have so many opportunities and so many different ways to win a football game, and we have to find just one. It’s possible obviously and we can do that.
“We face City two, three – with cup competitions, the Champions League – five, six times maybe a year but not more often than all the rest.
“If Erling Haaland goes there, it will not weaken them, definitely not. I think there’s enough spoken about this transfer. I know there is a lot of talk out there about money, but this transfer will set new levels, let me say it like this.”
City have often played without a recognised striker this season following the exit of club-record goalscorer Sergio Aguero at the end of the 2020/21 campaign.
Asked whether his side needs a number nine, Guardiola said: “We are playing with good strikers this season, so I don’t know what is going to happen in the future. It’s next season, so I’m not going to talk [about it].”
Sky Sports News have approached Man City for comment.

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The White House has warned that it does not have enough money to buy next-generation Covid vaccines for all Americans ahead of a possible fall infection wave.
If Congress fails to pass additional funding, the U.S. will have to limit the updated Covid shots to individuals at the highest risk of severe disease, a senior administration official said.
Pfizer and Moderna are developing shots that target the mutations of the omicron variant to boost protection against infection.

A woman receives a Pfizer vaccination booster shot at Eugene A. Obregon Park in Los Angeles.
Gary Coronado | Los Angeles Times | Getty Images

The U.S. will have to limit the next generation of Covid vaccines this fall to individuals at the highest risk of getting seriously sick from the virus if Congress fails to approve funding to purchase the new shots, according to a senior Biden administration official.
The official, who spoke on condition of anonymity, warned the U.S. faces a substantial surge of Covid infections this fall as immunity from the current vaccines wanes and the omicron variant mutates into more transmissible subvariants. The U.S. needs more money for next-generation vaccines, therapeutics and tests to prevent infections from turning into hospitalizations and deaths, the official said.

Pfizer and Moderna are developing redesigned vaccines that target the omicron variant’s mutations to boost protection against infection. The current shots are still targeting the original virus strain that first emerged in Wuhan, China, in 2019. As the virus has evolved over the past two years, the vaccines have become less effective at preventing mild illness, though they generally still protect against severe disease.
The Food and Drug Administration is expected to make a decision by early summer at the latest on whether the U.S. should switch to the redesigned shots for a fall vaccination campaign, with its advisory committee set to hold a meeting on June 28 to discuss the issue.
However, the U.S. currently does not have enough money to purchase the new shots for everybody in the U.S. ahead of the fall, the official said. The U.S. Senate has failed so far to pass $10 billion in additional Covid funding for vaccines, therapeutics and testing despite Senate Majority Leader Chuck Schumer, D-N.Y., and Sen Mitt Romney, R-Utah, striking a deal in early April. The $10 billion Senate deal is less than half the $22.5 billion the White House originally requested.
“We will be able to get some vaccines of the new generation but it’ll be a very limited amount and really only for the highest-risk individuals, but it will not be available for everybody,” the official said. The elderly and people with weak immune systems are the highest risk of severe illness from Covid.
Congress needs to pass funding within the next few weeks to ensure that contract negotiations between the federal government and the vaccine makers are in an advanced stage by July, the official said. However, Republicans in the Senate have vowed to block the money unless the White House reinstates Title 42, which allowed the U.S. to turn away asylum seekers at the nation’s borders during the pandemic.

Even if the money comes through, it’s unclear if the vaccine makers can produce enough shots for the fall given how short the timeline is. Moderna CEO Stephane Bancel told CNBC last week it’s a tight turnaround for any biotech company to have tens of millions of doses ready for the fall if they don’t order supplies and start production before July .
“If you look at the timelines, I don’t think any manufacturer will be able to be ready in August to fill the channel with product,” Bancel told CNBC’s Meg Tirrell. The U.S. government’s last contract for Covid vaccines with Moderna ended in April.
Pfizer CEO Albert Bourla told CNBC last week that the pharmaceutical giant would be ready to start manufacturing doses of its next-generation vaccine as soon as it receives guidance from the FDA.
The U.S. also needs more money for testing to ensure that the nation has enough capacity for the fall, the administration official said, warning that domestic manufacturers are shutting down production lines now. Without funding, the U.S. would be dependent on test manufacturers in other nations, particularly China, the official said.
“It’s going to be a pretty tough fall and winter if Congress abdicates its responsibilities and does not show up with funding for the American people,” the official said. “We’re going to do what we can but at the end of the day, our hands are going to be tied.”

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As economic pundits raise fears about a recession, the most powerful names in the travel and hospitality businesses are pushing back.
For example, Marriott CEO Tony Capuano said, “This summer is going to be gangbusters. Expedia CEO Peter Kern said he does not see travelers cancelling plans.
The question now is if summer 2022 will be as strong as CEOs are envisioning in the face of stock market and economic turmoil.

As economic pundits raise fears about a recession, the most powerful names in travel and hospitality are pushing back, pointing to bookings that illustrate a positive picture of the American consumer.
“We think this summer is going to be gangbusters for travel,” Marriott CEO Tony Capuano told last week.

Marriott saw an 81% rise in first quarter revenue compared to the same quarter a year ago as more leisure and business travelers got back on the road as Covid restrictions eased.
Despite concerns around inflation, Expedia CEO Peter Kern said he does not see travelers cancelling plans because there’s so much pent up demand following the pandemic.
That demand has driven the average daily rate at U.S. hotels up 40% compared to a year ago, according to hospitality analytics firm Smith Travel Research.
“We haven’t seen any signs of consumers being impacted in terms of travel spend. We all know there were pent up savings and underspend during Covid,” said Kern to CNBC.
Expedia saw its gross bookings jump 58% in the first quarter compared to a year ago, a significant jump but slightly below Wall Street estimates.

As travel rebounds, publicly listed travel giants are starting to spend more on marketing and advertising – setting the stage for a competitive summer.
Kern hosted a travel conference last week in Las Vegas, where the online travel operator unveiled a number of new technology updates that empower travelers with new data they can use to make smarter choices when booking a trip. Those enhancements include a price tracking tool and customized hotel scores based on guest reviews.
Booking Holdings CEO Glenn Fogel not only joined the chorus of hospitality executives reinforcing the pick-up in travel as restrictions ease, but also shared an eye-popping number: Gross bookings for this summer are tracking 15% above 2019 levels, before Covid shutdown the world.
“Travel is coming back, we are all pleased. We went through a hard time for two and half years of people not being able to travel the way they wanted to,” Fogel told CNBC.

Could market, economy play spoiler?

The question now is if summer 2022 will be as strong as CEOs are envisioning — or, if consumers rethink travel due to economic constraints or the prolonged volatility in the stock market.
The market turmoil could eventually hurt the “wealth effect,” Truist Securities lodging and leisure analyst Patrick Scholes told CNBC. “Basically if we see a sustained bear market, people feel more conservative about their ability to spend.”
Things aren’t that bad yet, thanks in part to the strength in the housing market, he said. “For example, personally while my stock portfolio may be down this year, it’s probably balanced out by appreciating in the value of my home,” he added.
Prior economic slowdowns have led to a drop in travel bookings. Data from STR shows that following every economic recession, Americans held back on travel leading to a decline in bookings.
Pebblebrook Hotel Trust Chairman and CEO Jon Bortz doesn’t think history will repeat itself. “There is so much emotion attached to travel right now… [that] people are not going to cancel a trip to see their family for the first time in two years,” he argued.
While higher interest rates could push consumers to opt for cheaper options, executives are not seeing any evidence of that right now.
Some industry experts disagree, saying they’re starting to see concern to peak through.
Looking beyond bookings, construction of new hotels has fallen in recent months. Over 154,000 rooms were in construction in March, which was down 15.7% from a year ago, according to STR.
“Construction costs have gone up substantially due in part to wage inflation, supply constraints and higher interest rates,” Jan Freitag, national director at the real estate research CoStar group, told CNBC.

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Shares of Rivian Automotive plummeted in premarket trading Monday.
CNBC reported Saturday that Ford Motor plans to sell 8 million shares of the electric vehicle start-up.
A stock lockup period for company insiders and early investors such as Ford expired Sunday.

Production of electric Rivian R1T pickup trucks on April 11, 2022 at the company’s plant in Normal, Ill.
Michael Wayland / CNBC

Shares of Rivian Automotive plummeted in premarket trading Monday following a CNBC report that Ford Motor plans to sell 8 million shares of the electric vehicle start-up.
Rivian’s stock was down 19% in extended trading to below $24 a share, poised to add to significant losses for the year. Shares of the automaker closed Friday below $30 for the first time since the company went public through its blockbuster IPO in November. The stock has fallen 72% this year.

A stock lockup period for company insiders and early investors such as Ford expired Sunday.
CNBC’s David Faber reported Saturday that Ford would sell 8 million of its Rivian shares through Goldman Sachs. The Detroit automaker currently owns 102 million shares of Rivian. A Ford spokesman declined to comment Monday morning.
Faber on Monday called the sale “done,” saying shares are already being distributed.
JPMorgan Chase also plans to sell a Rivian share block of between 13 million and 15 million for an unknown seller, people familiar with the plans told Faber. Both blocks of stocks are priced at $26.90 a share.
Rivian said in March it expected to produce 25,000 electric trucks and SUVs this year, as the start-up battles through supply chain constraints and internal production snags. That would be just half of the vehicle production it forecast to investors last year as part of its IPO roadshow.
The company is scheduled to report its first-quarter results after market close Wednesday.

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