Workhorse (NASDAQ:WKHS) plunged nearly 50% on Tuesday thanks to one big piece of news. After great anticipation, the United States Postal Service awarded its fleet contract. Workhorse was not the winner, and the massive drop in WKHS stock reflects that. Here is what you need to know now.
Today, the USPS finally announced the winner of its electric vehicle contract. As part of this, the contracted company will help the postal service electrify its fleet, taking it into the new age. As one of the finalists, many investors were confident that Workhorse was a clear fit for the role. However, Oshkosh Defense nabbed the deal instead.
According to the press release, the U.S. Postal Service plans to soon release a 1o-year plan to improve its technology and infrastructure. This contract to electrify its fleet is the first step, and one that has been closely watched. Thanks to several delays, the process of identifying a winner has drawn on, creating a lot of hype and volatility for WKHS stock.
The Postal Service said that through a $482 million investment, Oshkosh Defense will finish a production design for the Next Generation Delivery Vehicle (NGDV). Then, over the course of 10 years, it will assemble between 50,000 and 165,000 of the vehicle. They will feature either fuel-efficient internal combustion engines or battery electric powertrains.
For context, investors should note that the USPS has 230,000 vehicles in every class. This includes 190,000 that routinely deliver mail. These NGDVs will help replace and expand its fleet, which includes outdated and fuel-inefficient vehicles.
Unsurprisingly, this is a huge blow for WKHS stock. But what else should you know?
WKHS Stock and the Postal Service Contract
Investors should not be entirely surprised by the 50% plunge in Workhorse shares. The fate of the company seemed to rest heavily on the outcome of the contract, and it was a focal point of WKHS stock analysis and hype. Because so many investors were confident in its success, the blow today feels particularly painful for fans of the EV company.
And to be fair, this contract was a huge part of the story for Workhorse. Without it, it will take time for the company to pivot and attract enthusiasm for another project. However, there is one reason for hope. Earlier in 2021, WKHS stock rallied for a different catalyst. President Joe Biden said he wants to electrify the entire federal fleet. Investors quickly saw Workhorse as a potential beneficiary, and that just may be the case.
As you consider what to do next with Workhorse, make sure to do your own research.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer with InvestorPlace.com.