Lordstown Motors Corp. shares dropped more than 20% late Tuesday after the electric-vehicle company warned investors about its ability to continue functioning financially.

In delayed quarterly and annual filings with the Securities and Exchange Commission that were made public Tuesday, Lordstown
RIDE,
-16.27%
added a “going-concern” warning, which informs investors that it may not be able to continue operating due to financial conditions.

“The company’s ability to continue as a going concern is dependent on its ability to complete the development of its electric vehicles, obtain regulatory approval, begin commercial scale production and launch the sale of such vehicles. The company believes that its current level of cash and cash equivalents are not sufficient to fund commercial scale production and the launch of sale of such vehicles,” the filing states. “These conditions raise substantial doubt regarding our ability to continue as a going concern for a period of at least one year from the date of issuance of these unaudited condensed consolidated financial statements.”

Lordstown shares were trading near their daily peak of $15.80 when the filings were released Tuesday, and then plunged as low as $10.30 before closing with a 16.3% decline at $11.22. Shares fell again in after-hours trading, however, again trading at less than $10.50 a share.

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Lordstown executives revealed concerns about their financial position in the electric-vehicle company’s most recent earnings report. The company, which has been planning to introduce an electric pickup truck called the Endurance, disclosed in May that production under current financial conditions “will be limited and would at best be 50% of our prior expectations.”

Also on Tuesday, analyst Joseph Spak with RBC Capital started coverage of Lordstown’s stock with the equivalent of a sell rating.

While there are some “clear positives” for Lordstown, the fleet pickup market that it is going after is “ultimately small and fiercely competitive,” Spak said.

“Our forecasts are significantly lower than management targets and consensus and see significant capital raises as necessary,” Spak said. The stock “will be volatile and trade on sentiment, production milestones, orders and partnerships,” and there’s downside possible for RBC’s $5 price target, which represents about 55% downside from Tuesday prices.

Lordstown went public in October through a reverse merger with a special-purpose acquisition company, or SPAC, that raised nearly $700 million. That path to the public markets has been popular for companies seeking to make electric vehicles, as potential Tesla Inc.
TSLA,
-0.25%
competitors seek to raise enough money to produce EVs, an expensive task.

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Since going public, Lordstown has struggled. Short seller Hindenburg Research published a report on the electric-truck maker earlier this year, accusing it of misleading investors and being a “mirage.” Established auto makers have also made strides in introducing electric pickups, including Ford Motor Co.
F,
-1.57%,
which recently unveiled an electric F-150.

Claudia Assis in San Francisco contributed to this report

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