RMO commercial vehicle batteries/possible earnings play

Don’t have a huge amount of time to do a bunch of research on my lunch break but I intend to follow up with more, feel free to add what you know in comments whether for or against this stock. Due to the stock being below $5 pretty consistently since August, but with expansion plans and deals with LG to supply battery cells, and a 5 year deal with Peterbilt, and the upcoming earnings on November 15th, I’m considering shares and/or $5 strike calls on the 19 November expiration date.

They did have a CEO shake up in August when the CEO was replaced, which may not be a great sign, and I want to do further research later today, but I might be interesting in hopping in. Let me know what you all think.

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Ok, so, having had a little more time to dig into this tonight, I’ve got a hunch this earnings upcoming on 11/15 is going to be another flop. Romeo has made some progress, expanding into a new production facility twice the size of their current building, and have secured customer contracts with the likes of Peterbilt and supply contracts with LG. However, they recently had a CEO swap back in August, right before their last earnings, which resulted in the stock dropping about 20% the next day. It’s been bouncing between about $4-5.50 since then. They have a backlog of over $550 million in contracted sales, but as of August were reporting they were “expecting to begin production on some of” the backlog starting in Q4. Peterbilt doesn’t expect to manufacture their electric trucks, which would have Romeo batteries, until 2022. I’ve seen no news since then to indicate they’ve picked up any significant customers or been able to meaningfully increase production since then. Most damningly, several analyst groups have downgraded the stock with price targets now as low as $2.35, so I’m feeling pretty dang bearish on this. I had initially thought it would be a bullish play based on EV sentiment and the infrastructure bill, but I think supply chain issues and slow growth of significant customers is really hurting this company and making me consider some 11/19 $4 puts, which as of close on Tuesday 11/9 were selling for $0.13 with an OI of 1k.

Main source: Slumping Battery Startup Romeo Power Pays Big To Secure Cell Supply