I’ll be the first to admit that sometimes I like Workhorse Group (NASDAQ:WKHS), and other times I don’t. I’ve been bullish on WKHS stock before, but there are always two sides to every story, and currently I’m seeing a major threat to Workhorse.
A focal point of the debate over WKHS stock revolves around whether Workhorse will win the huge $8.1 billion USPS fleet upgrade contract that’s up for grabs.
The WKHS stock price recently popped, and I’m starting to wonder whether the shareholders have already priced in an event that hasn’t actually happened yet — namely, getting the aforementioned USPS contract.
With that in mind, let’s start with a breakdown of the recent price action in WKHS stock. Afterwards, we’ll turn our attention to an automotive giant that’s threatening to steal market share from Workhorse.
A Closer Look at WKHS Stock
First off, let me say that WKHS stock isn’t for the timid. The stock’s 52-week range is $1.32 to $42.96, and there were sizable moves along the way in both directions.
The next statistic I’d like to point out is that Workhorse has trailing 12-month earnings per share of -$2.65. Value-focused investors should prefer to invest in companies that don’t have negative earnings figures.
On top of that, WKHS stock has a five-year monthly beta of 3.22. This means that WKHS moves three times as fast as the overall stock market. Therefore, it might not be appropriate for safety-minded investors.
Finally, let’s consider the recent price move of WKHS stock. This is a stock that started 2021 at around $20 or $21. As of Feb. 16, the share price had already ascended to $34.39.
That’s a considerable return on investment within a very brief period of time. Unless Workhorse is posting mind-blowing earnings figures (and I just showed that this isn’t the case), it only makes sense to take profits in WKHS stock.
BrightDrop Drops
When recording artists are about to release a new song or album, sometimes they’ll reveal when it’s about to “drop.”
Similarly, General Motors (NYSE:GM) is “dropping” BrightDrop, an electric delivery pallet, which the company describes as “a new one-stop-shop ecosystem designed to help delivery and logistics companies increase efficiency and employee safety while lowering costs and reducing their carbon footprint.”
In other words, General Motors is staking its claim in the reduced-emissions last-mile-delivery niche. This could be a real game changer as BrightDrop’s first product to market, the EP1, has plenty of features.
These features include a payload capacity of 200 pounds, 23 cubic feet of cargo carry space and adjustable shelving to organize the contents.
Furthermore, the EP1 offers connectivity that “provides customers real-time features, including location monitoring, battery status, remote commands to lock and unlock, and over-the-air updates of connected features.”
Watch for This Delivery
WKHS stock holders really need to keep an eye out for General Motors’ activity in the last-mile-delivery space. Believe it or not, the EP1 isn’t even BrightDrop’s biggest threat to Workhorse.
The second product to market from BrightDrop will be the EV600, a zero-emissions purpose-built commercial vehicle that could easily rival Workhorse’s two vans targeting this niche, the C-650 and the C-1000.
The EV600 will offer connectivity features that you won’t likely find in the C-650 or the C-1000. These include “remote access, real-time location, battery and charging management, driver safety coaching and incident recording, remote diagnostics, safety alerts and predictive maintenance insights, and over-the-air updates.”
Have I mentioned yet that the EV600 has an estimated target range of up to 250 miles on a full charge? Or that it features more than 600 cubic feet of cargo area?
I’m not trying to imply that Workhorse’s delivery vans don’t have impressive features. WKHS stock holders just need to be aware of General Motors’ ambitions.
The Bottom Line
There are a number of potential issues with Workhorse. The USPS contract isn’t a done deal yet. Plus, the WKHS stock price recently moved much higher, which raises valuation concerns.
In addition, there’s a real threat from General Motors. With all of the foregoing in mind, it’s probably a good idea to take profits in WKHS stock.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.
