Workhorse Tests the Limits of the Electric Vehicle Bubble

Fisker (NYSE:FSR), which doesn’t yet make anything, is valued at $5.7 billion. Workhorse Group (NASDAQ:WKHS), which actually makes electric delivery vans, was worth $3.3 billion. This tells you all you want to know about electric vehicle names like WKHS stock.

Image of a Workhorse (WKHS) logo and drone on the side of a truck.
Source: Photo from

Workhorse reported results for the September quarter on Nov. 9. There was revenue of $565,000. There was a net loss of over $84 million.

Traders had already cut the price of the stock nearly in half. So they celebrated the release of the numbers, which represented more sales than anticipated.

There was also an order in the press release, for 500 of its C-1000 delivery vehicles. The order came from Pritchard, a car dealer based in northern Iowa that also sells Winnebagos and golf carts.

Waiting on the Postal Service

What would get Workhorse stock rolling would be an order from the U.S. Postal Service. It’s looking to buy 140,000 new electric delivery vehicles. Workhorse is one of three finalists for the order.

The C-1000 looks competitive. It’s all electric, it recharges overnight, it has 1,000 cubic feet of storage space. My mail carrier would look sharp in it. Workhorse’ current valuation is half the value of that contract. Do I have to mention there are two other finalists? 

Assuming it wins the order, and that’s still an assumption, Workhorse might have it made. Pritchard’s ready to deliver on further orders, and it has financing with which to do it.

Workhorse has also applied to the Federal Aviation Administration for permission to fly its “Horsefly.” This is a delivery drone that would complement the vans, carrying a 10-pound payload up to 10 miles. It’s a process that will take two years to play out, but you can see where it’s going.

Workhorse wants to let American companies match (NASDAQ:JD) and other Chinese logistics masters. Unlike most electric vehicle start-ups, Workhorse has a strategy and a plan to execute on it.

Can It Deliver?

Hidden inside the earnings release was a warning. The fourth quarter report will be a disaster. Workhorse hoped to complete up to 400 vans this year, mostly in that fourth quarter. But the novel coronavirus and battery supply issues mean it will make “a substantially lower amount.”

Analysts don’t know what to say about the stock. TV analyst Jim Cramer reversed himself. First he called Workhorse a “showhorse” on October 30. A few weeks later he capitulated, telling a caller to buy it. (Cramer still thinks it a showhorse.)

Short sellers at Fuzzy Panda wrote in early October that its Postal Service bid had critical failures. The parking brake failed on a prototype, injuring a driver. This is what caused the stock’s fall during the month, making it appear a bargain. Our Will Ashworth dismissed the Fuzzy Panda report but admits that for now this is only a stock for speculators.

The Bottom Line

Of all the electric vehicle start-ups looking for investor love, I’m highest on Workhorse.

It’s been around for years, having launched as AMP Holdings with assets from Navistar (NYSE:NAV), the former International Harvester. The company has a strategy. It has partners. It has enough cash to execute.

But this is still a speculation. Workhorse may win the Postal Service contract, but it may not. Management may be able to scale production, or they may not get enough batteries.

I suspect the shares are going to fall for weeks to come. There are shinier objects out there. The fourth quarter report will be a disaster. But around February, take another look. If the price then looks reasonable, you might throw a few dollars at it.

At the time of publication, Dana Blankenhorn had a long position in JD.

Dana Blankenhorn has been a financial and technology journalist since 1978. His latest book is Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, essays on technology available at the Amazon Kindle store. Write him at or follow him on Twitter at @danablankenhorn.

Article printed from InvestorPlace Media,

©2022 InvestorPlace Media, LLC