What is happening with Workhorse? Electric Vehicle Producer Announces New Orders

What is happening with Workhorse? Electric Vehicle Producer Announces New Orders

Amerit and Workhorse Announce Purchase Order for 10 All Electric EVolution Mobile Service Centers

What does Workhorse do?

Moreover, Workhorse Group Inc. is an Original Equipment Manufacturer (OEM) of Class 3-6 Workhorse brand medium-duty trucks.

Is Workhorse a buy or sell?

Workhorse is cheap for several reasons.

Firstly, compared with Rivian, XPeng, NIO, Tesla and other companies in the electric vehicle industry, Workhorse has smaller capacity and scale. Workhorse produces and delivers a small number of cars each year, and its main business is unprofitable. Workhorse relies on financing and investment to raise cash.

The sales were negative in 2021. And Workhorse reported its cost of sales increased to $132.49 million in 2021 from $13 million in 2020. As shown in Figure 1. There is a net loss of $401.34 million in 2021.

Figure 1. 2021, 2020 Income Statement of Workhorse

The company has struggled to gain any sort of traction with its electric vans, and is hemorrhaging money even before it begins its efforts to scale up its manufacturing.

Secondly, Workhorse’s stock price has fallen because of the impact of the electric vehicle industry. On cost, supply chain pressure and rising costs last year put electric vehicle companies in a difficult situation. Raw material prices have soared, especially for batteries. In addition to the chip shortage, repeated outbreaks have put pressure on its supply chain and factory operations. Workhorse’s costs are significantly higher in 2021 than they were in 2020.

As a result, of the loss of the Postal Service contract, Workhorse’s share price fell sharply.

When the Postal Service contract was awarded to Oshkosh Corp. in February 2021, speculators in Workhorse stock ran for the exits, driving the share price about 50% lower in two trading sessions. 

Figure 2.
Figure 3.

4. Workhorse has less debt maybe because it converts debt into equity. Workhorse removes debt from the balance sheet as High Trail converts debt holding to common stock. High Trail agreed to exchange the outstanding 4.00% senior secured convertible notes it held for about $29.7 million worth of Workhorse common stock. Furthermore, which represents about 3.9% of the company’s market capitalization of $752.4 million at March 29, 2022. As a result, Workhorse benefits from less debt with less interest pressure. Its current liquidity ratio and quick ratio are quite high compared to other companies in the industry.

Workhorse’s stock price was influenced by the decision that the management made. Workhorse’s management signed an at-the-market common stock offering that would allow it to sell $175 million worth of shares, which would further dilute its current shareholders. Moreover, this tactic shouldn’t be surprising. Workhorse’s share count has ballooned from 4 million back in 2013 to 151 million today. This news caused its stock price to drop more than 7 percent to $3.53 in premarket trading on March 10, 2022.

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Written by Xin Hong

What is happening with Workhorse? Electric Vehicle Producer Announces New Orders

References:

Workhorse Group Reports Fourth Quarter and Full Year 2021 Results, March 01, 2022, 

https://ir.workhorse.com/news-events/press-releases/detail/191/workhorse-group-reports-fourth-quarter-and-full-year-2021.

Alan Adler, Stock deal clears Workhorse Group’s debt, Wednesday, April 6, 2022, 

Brett Schafer, Why Workhorse Group Soared 59.7% in March, Apr 4, 2022,

https://www.fool.com/investing/2022/04/04/why-workhorse-group-soared-in-march/.

Workhorse – Stock Price History | WKHS, April 28, 2022, 

https://www.macrotrends.net/stocks/charts/WKHS/workhorse/stock-price-history.

What is happening with Workhorse? Electric Vehicle Producer Announces New Orders