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Myles Udland, Brian Sozzi, and Julie Hyman break down Monday’s early market movers, which include: Chipotle getting a boost in shares after news of the restaurant’s plans to increase prices, Novavax experiencing a surge after a study shows the company has an effective COVID vaccine and Lordstown taking another huge hit after the CEO and CFO resigned.
- We mentioned futures aren't doing a whole lot, but we do have some individual names that are on the move. And one is an ongoing saga that I think has now probably overtaken Nikola as the poster child for bad SPAC behavior, and that is Lordstown Motors.
Stock is off about 17% in the premarket. And Sozzi, this comes as the company announced its CEO and CFO will be stepping down. Now, in a separate release, the company responded to that Hindenburg short-selling report. And of course, the report that Lordstown puts out-- on the one hand, it's classic, right? In significant respects, the Hindenburg Report is false and misleading. OK, one sentence goes by. Then, Lordstown says our investigation did, however, identify issues regarding the accuracy of certain statements regarding the company's preorders.
Those statements are why the CEO and the CFO are out. And those statements are why I don't think anybody, for the indefinite future, can believe anything that Lordstown says in any form or fashion.
BRIAN SOZZI: Yeah, the solution here is everybody at Lordstown needs to leave-- the executive team, the board of directors. And, you know, they pointed this morning-- quick, [INAUDIBLE], let me set this up. So Steve Burns, now also-- now the outgoing CEO. He was also the founder.
And I think why you're seeing the stock down here so much in the premarket, of course, is you can't trust the company's financials. And you can't trust the executive team that is remaining at the company. He also owns, still, 27% of the stock-- very much unclear when you see a founder really embattled, just really battered here, over the past few weeks, and deservedly so. What does he do with his 27% stake in the company? Does he dump it all and put more pressure on the market? Unclear.
Now, leading the company, at least on an interim basis, is Angela Strand. She's now the executive chair of them. But she comes from the board. What did she do on the board? She led the company's compensation and nominating and corporate governance committees.
Now, I have reached out to Strand to invite her to come onto the show, explain her direction for the company, what in the world is in fact happening at Lordstown. We had Steve Burns on here in February this year, making wild, wild claims that now, in hindsight, look that they just cannot be believed, nor were they in fact true.
Now, the thing with Strand is that she was at Workhorse with Burns back in the day. They worked together. You know, there's also another Workhorse executive still on this company's board. So there's a big credibility factor here with the folks that are now in place to run this company on a short-term basis. They have to raise cash. They have to meet some form of delivery and production targets later this year, which they just cut. But all this remains very much in question.
- Yeah, I think-- look, there's a lot to be desired with SPAC disclosures and a lot of rules that, you know, are pretty ridiculous in terms of what companies can say. And I think for there to be, now between Nikola and Lordstown, multiple companies in the same sector basically doing the same thing, which is saying that a car exists when it actually doesn't is not gonna instill confidence in either of those companies as they, you know, exist going forward, and certainly not in the space at large. And we saw there the opening bell on this Monday morning, Global Payments ringing the bell. But, you know, Sozzi, I know you wanted to wrap up that SPAC conversation as well.
BRIAN SOZZI: Yeah, too, and I think what you've learned-- you had Nikola with Trevor Milton. And you had a founder there very excited about his business and the path forward. You have Steve Burns, founder now, got the boot from his company. Very important lesson here for founder-led companies when you come public, whether it's a SPAC or in general-- just make true claims and hold some form of reasonable outlook for your company. You cannot come out here in a public forum when you're a public company and just say things that may never actually happen, and if they do, it may not happen in our lifetimes.
- Yeah. And, you know, I think the electric vehicle space, for a lot of different reasons, is front and center here. But I can go back through, you know, my mental bank of the companies that we talked to that were coming public via SPAC and some of the projections that they had about the future of their business. And certainly there is a ticking clock on making some of those things come true because I think with some credulity did we read those investor presentations.
All right, let's take a look at another stock that is on the move. That's Novavax-- shares higher after the company announced that its COVID-19 vaccine 90% effective in a Phase III study. Shares here up about 10%, Julie, and again, we have kind of a world beginning to start-- I wouldn't say drowning in vaccines, but there is now ample supply, and one hopes-- one hopes that there can be a higher level of global coordination than there has been in getting these vaccines globally distributed because again, the, you know, situation in the US and the UK versus the rest of the world is dramatically different at this point.
- Yeah, and there's something that's very important about this vaccine trial in particular and its implications for being used around the globe. And that's that it was shown to be highly effective against the variants of the disease. Now, that's particularly the alpha variant that had been more common in the United States. But the so-called Delta variant is quickly spreading across the globe. It's the one that has been so prevalent and so deadly in India. It is spreading now quickly in the UK as well. And so if this Novavax vaccine proves to be quite effective against that variant, that would be a significant development.
This trial, by the way, as you said, 90% efficacy-- almost 30,000 people were involved in this study. All of that says it still looks like it's gonna be a little while before they are ready to apply for the FDA emergency use authorization in the United States, because they need to finish prepping their manufacturing apparatus. But that said, they're looking at a ramp-up to about 100 million doses, initially, of that, I believe, and then 2 billion doses when they're at full capacity.
So this is something we continue to watch closely because as we've been reminding viewers on this program, even though here in the United States we're now at more than 40% vaccination rate-- lower levels in the South, et cetera-- but around the globe, we are seeing much higher case rates, still, and not as much vaccine availability. So we'll see how this plays out and how quickly it can get out to other nations in particular.
- And again, that stock, again, responding in kind to that news-- shares up about 7%. All right, let's turn our attention now back to the world of fast food and the US labor shortage-- Chipotle getting a big upgrade, Sozzi, from the folks over at Raymond James, $1,800 price target on the stock. That would give Chipotle valuation at around $60 billion for burritos.
BRIAN SOZZI: Yeah, well, a little something a little more positive than that Lordstown disaster, which just gets everybody fired up on this Monday morning. But yes, Raymond James restaurant analyst Brian Vaccaro-- I exchanged an email with him this morning. He's up very early after this note upgrading his rating to strong buy from outperform. So he went from bullish to super bullish is how to read this one. His price target is now $1,800, looking for 30% upside in Chipotle shares.
So you ask, why is he super bullish on the stock here? The price increases that Chipotle has put in place recently-- about a couple weeks ago, like we talked about recently-- they are likely to drive strong upside in sales and earnings over the next couple of quarters. What's interesting here, guys-- Vaccaro sees more price increases at Chipotle in the second half of this year, could be 9% to 10% worth of more or just more additional price increases to offset whatever inflation they're seeing. In turn, that will likely benefit sales and profit margins too.
And then, despite all of these price increases, Vaccaro is still not thinking that this impacts Chipotle's customer base. The customers he sees will still probably go there in a big way. And I put out a tweet this morning here looking at some of the big price increases that Chipotle has seen over the past two weeks based on Vaccaro's research. Get this, guys. Chips at a Chipotle in Boston are up 13.3% over the past two weeks. Again, it's one location, but in some other locations-- carnitas burrito in San Francisco up close to 11% in prices, a chicken burrito in New York City, Miles, up 6.1% in the location that Vaccaro tracked, so 6.1% increase for your favorite burrito, guys.