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Why Is Lordstown Motors (RIDE) Stock Up Today — June 16?

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Written by Timothy Sykes
Updated 6/16/2023 3 min read

Lordstown Motors (NASDAQ: RIDE) stock spiked over 60% from yesterday’s, continuing the momentum from last week and benefitting from the hotness of the electric vehicle (EV) sector. Entering the mid-point of the trading day, RIDE is still up more than 25% since the start of the day!

This price move coincided with a surge in volume. 38 million shares have traded hands so far today — almost tripling the reverse split-shrunken float!

EV Sector Momentum

The broader EV sector has been experiencing considerable momentum, largely attributed to the Federal Reserve’s decision to pause rate hikes, which has sparked a rally in EV-related stocks.

Lordstown Motors is part of the EV sector. It recently experienced a significant surge in its share price, despite a lack of company-specific news. In the past week, it’s up 125%.

This surge is indicative of strong demand for EV stocks in general, and Tesla (NASDAQ: TSLA) stock in particular. This positive sentiment has spread to other companies involved in the EV sector, leading to a sympathy boost in their share prices.

RIDE Chart Patterns

Lordstown’s chart reveals a strong upward trend, with the stock rallying considerably over the past week. This upward movement aligns with the broader bullish trend observed in the EV sector.

Over a longer timeframe, this spike is a tiny blip on this stock’s long fade. It’s lost nearly 99% from its 2021 high!

Is RIDE Stock a Buy on June 16?

Here’s what we like: There’s been some tradeable chart action in this stock over the past few days. Even if it fades, chances are there will be some bounces on the way.

The company’s stock float has been significantly reduced due to a 1-for-15 reverse stock split. While this move was intended to maintain compliance with Nasdaq’s minimum listing requirements, it also means that less volume is needed to move the stock price, making it more volatile.

Here’s what we don’t like: Reverse splits are often a sign that a company is in trouble and can’t get its stock price up based on real value. This consolidation of every 15 shares of RIDE stock into a single share has increased the price of its stock without directly affecting its market capitalization or shareholders’ stakes in the company.

In the long-term, RIDE has been in a consistent downtrend. Nothing material has changed about this stock, even with the 125% run this stock has gone on this week.

Whether RIDE is a buy or not depends on your individual trading strategy and goals. Have a trading plan, and follow it!

Tim Sykes has no position in any of the stocks mentioned. Timothysykes.com has a disclosure policy.

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Timothy Sykes

Tim Sykes is a penny stock trader and teacher who became a self-made millionaire by the age of 22 by trading $12,415 of bar mitzvah money. After becoming disenchanted with the hedge fund world, he established the Tim Sykes Trading Challenge to teach aspiring traders how to follow his trading strategies. He’s been featured in a variety of media outlets including CNN, Larry King, Steve Harvey, Forbes, Men’s Journal, and more. He’s also an active philanthropist and environmental activist, a co-founder of Karmagawa, and has donated millions of dollars to charity. Read More

* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

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Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”