Myles Udland, Brian Sozzi and Julie Hyman break down the top players in Monday’s market, including: Chipotle gets stock increase after restaurant’s plan to raise prices is announced, Novavax sees increase after study shows the company has an effective COVID vaccine and Lordstown took another huge blow after the CEO and CFO resigned.
– We mentioned that futures don’t do much, but we have individual names that are on the move. And one is an ongoing saga that I think probably overtook Nikola as the star kid of PSPC bad behavior, and that’s Lordstown Motors.
The stock is down about 17% in the pre-market. And Sozzi, it comes as the company announced that its CEO and CFO will step down. Now, in a separate statement, the company has responded to this Hindenburg short sale report. And of course, the report that Lordstown publishes – on the one hand, it’s classic, right? In many ways, the Hindenburg report is false and misleading. OK, a sentence passes. Next, Lordstown said our investigation, however, identified issues with the accuracy of some statements regarding the company’s pre-orders.
These statements are the reason the CEO and CFO are absent. And these statements are the reason why I think no one for the indefinite future can believe anything Lordstown is saying in any form.
BRIAN SOZZI: Yeah, the solution here is everyone in Lordstown has to go – the management team, the board. And, you know, they punched in this morning– quick, [INAUDIBLE], let me configure it. So Steve Burns, now too – now the outgoing CEO. He was also the founder.
And I think the reason you see so many stocks here pre-market, of course, is that you can’t trust the company’s financials. And you can’t trust the management team that stays with the company. He also owns, still, 27% of the shares – which is not clear when you see a founder who is really struggling, just really beaten here, in the last few weeks, and rightly so. What does he do with his 27% stake in the company? Is it emptying everything and putting more pressure on the market? Not clear.
Today, Angela Strand is the head of the company, at least on an interim basis. She is now the Executive President. But it comes from the board of directors. What did she do on the board? She headed the company’s remuneration, nomination and corporate governance committees.
Now, I’ve reached out to Strand to invite him to come on the show, explain his direction for the company, what’s really going on in the world in Lordstown. We had Steve Burns here in February of this year, making some wild, savage claims that now, in hindsight, just seem impossible to believe, nor in fact true.
Now the problem with Strand is that she was at Workhorse with Burns at the time. They worked together. You know, there is also another executive from Workhorse on the board of directors of this company. So there is a great credibility factor here with the people who are now in place to run this business in the short term. They have to raise funds. They have to meet some form of delivery and production targets later this year, which they just cut. But all this remains very questioned.
– Yeah, I think– look, there’s a lot to be desired with PSPC disclosures and a lot of rules that, you know, are pretty ridiculous in terms of what companies can say. And I think there will be, now between Nikola and Lordstown, several companies in the same industry that do essentially the same thing, that is, a car exists when it does not exist, it does not. is not going to inspire confidence in either of these companies because they, you know, exist in the future, and certainly not in space in general. And there we saw the opening bell this Monday morning, Global Payments ringing the bell. But, you know, Sozzi, I know you wanted to wrap up this PSPC conversation as well.
BRIAN SOZZI: Yeah too, and I think what you learned – you had Nikola with Trevor Milton. And you had a founder there who was very excited about his business and the way forward. You’ve got Steve Burns, now founder, got the boot of his business. Very important lesson here for companies run by founders when going public, whether it is an SPAC or in general – just make real statements and maintain some form of reasonable outlook for your business. You can’t come here in a public forum when you’re a public company and just say things that might never happen, and if they do, it might not happen in our lifetime.
– Yes. And, you know, I think the EV space, for a lot of different reasons, is front and center here. But I can review, you know, my mind bank of the companies we spoke with that were going public through PSPC and some of the projections they had on the future of their business. And certainly time is running out for some of these things to happen, because I think we’ve read these investor presentations with some gullibility.
Alright, let’s take a look at another stock that’s on the move. It’s Novavax – shares rose after the company announced that its COVID-19 vaccine was 90% effective in a Phase III study. The shares here have gone up about 10%, Julie, and again we have a kind of world starting to start – I wouldn’t say drowning in vaccines, but now there is a sufficient supply, and we hope – it is hoped that there may be a higher level of global coordination than there has been for the global distribution of these vaccines, because again the situation in the US and UK compared to the rest of the world is radically different at this point.
– Yes, and there is something very important about this particular vaccine trial and its implications for its use around the world. And it is that it has been shown to be very effective against the variants of the disease. Now, it was especially the alpha variant that was most common in the United States. But the so-called Delta variant is spreading rapidly across the world. This is the one that has been so prevalent and so deadly in India. It is now spreading rapidly in the UK as well. And so, if this Novavax vaccine proves to be effective enough against this variant, that would be an important development.
This trial, by the way, as you said, is 90% effective – almost 30,000 people participated in this study. All of this says that it still looks like it will take a little while before they are ready to apply for emergency use clearance from the US FDA as they need to finish preparing their device to. manufacturing. But that said, they’re looking at ramping up to around 100 million doses, initially I believe, then 2 billion doses when they’re at full capacity.
So this is something that we continue to monitor closely because as we reminded viewers in this program, even though here in the United States we are now at over 40% vaccination rates – levels lower in the south, et cetera – – but around the world, we’re still seeing much higher case rates and less vaccine availability. So we will see how it goes and how quickly it can be disseminated in other countries in particular.
– And again, this stock, again, responding in kind to this news – stocks are up about 7%. Alright, now let’s turn our attention back to the fast food world and the labor shortage in the United States – Chipotle gets a big upgrade, Sozzi, from the folks at Raymond James, a goal of share price of $ 1,800. That would give Chipotle a valuation of around $ 60 billion for burritos.
BRIAN SOZZI: Yeah, well, a little something a little more positive than that Lordstown disaster that got everyone excited this Monday morning. But yes, Brian Vaccaro, restaurant analyst at Raymond James, I exchanged an email with him this morning. It is up very soon after this rating raising its rating to a strong buy after outperforming. So it went from bullish to super bullish, here’s how to read this one. His price target is now $ 1,800, looking for a 30% rise on Chipotle shares.
So you ask, why is it super bullish on the stock here? The price hikes that Chipotle put in place recently – about a few weeks ago, as we talked about recently – are expected to push sales and profits up sharply over the next two quarters. What’s interesting here, guys – Vaccaro sees more price increases at Chipotle in the second half of this year, it could be 9% to 10% more price increases or just more to make up for it. inflation they see. In turn, this will likely benefit sales and profit margins.
And then, despite all these price increases, Vaccaro still doesn’t think it’s impacting Chipotle’s customers. The customers he sees will probably still be going there a lot. And I posted a tweet this morning here looking at some of the big price increases Chipotle has seen over the past two weeks based on Vaccaro’s research. Get this, guys. Tokens in a Chipotle in Boston have risen 13.3% in the past two weeks. Again, this is one place, but in other places – carnitas burrito in San Francisco up almost 11% in price, chicken burrito in New York City, Miles, up 6.1% in the location followed by Vaccaro, so 6.1% increase for your favorite burrito, guys.