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Why Wall Street Walked Away From Workhorse Group

The case for Workhorse Group (NASDAQ:WKHS) stock was always based on a speculation. The U.S. Postal Service (USPS) needed new mail trucks. The next generation of mail trucks should be electric. Workhorse makes an electric truck that can carry mail. Therefore, WKHS stock advocates expected the company to produce new trucks for USPS.

Image of a Workhorse (WKHS) logo and drone on the side of a truck.

Source: Photo from

But Workhorse didn’t win the contract. Oshkosh (NYSE:OSK), best known for making Army vehicles, won it in February. Now Workhorse is suing to stop the deal.

The chatter surrounding the lawsuit has boosted the price of WKHS stock from a low of about $7 in May to its June 23 price of $15. Should investors take the gift and get out, or is there more to come?

What Happened to WKHS Stock?

Workhorse has filed a sealed bid protest with the U.S. Court of Federal Claims. It argues that the Postal Service wanted electric trucks, not gas vehicles, and that Workhorse offered the only bid for an all-electric fleet.

During his second quarter conference call, Oshkosh CEO John Pfeifer said, “We can do 100% electric vehicles from Day One. If the U.S. Postal Service came to us tomorrow and said, ‘We’ve got the funding to do 100% electric from 2023,’ we can do it.”

That’s the rub. U.S. Postmaster General Louis DeJoy’s USPS didn’t demand all-electric powertrains. President Joe Biden’s administration wants electric vehicles (EVs), but according to both Oshkosh and the Post Office, they would cost more money. In fact, when announcing the Oshkosh deal, DeJoy said only 10% of the new Postal Service vehicles will be EVs.

Workhorse, in its filing, says the Postal Service never fully evaluated an Oshkosh electric vehicle. Oshkosh even admitted last year that it doesn’t make EVs yet. Workhorse wants a preliminary injunction until the decision is reviewed.

Meanwhile, the USPS fleet is aging out. The average mail truck is now 25 years old. They were made by Grumman, now a unit of the defense contractor Northrup Grumman (NYSE:NOC).

The Postal Service contract could eventually be worth $6 billion — three times more than Workhorse’s current market cap. The initial installment of $482 million is for tooling that will enable deliveries to start in 2023.

The Workhorse Dispute Is All Politics

Obviously, this is a political dispute.

DeJoy was appointed by former President Donald Trump. Biden wants electric vehicles. The Senate has approved three Biden nominees to the Postal Service board, but the board still seems reluctant to fire the Postmaster General. The FBI is investigating DeJoy’s campaign finance activities, which could ease him out. Or it could just derail the bipartisan effort to relieve the Postal Service’s debt.

Oshkosh tried to put out the USPS fire by showing off its EV fire engine. The vehicle’s electric drive train system, Volterra, was developed by a subsidiary called Pierce Manufacturing. The company delivered the truck, the first of its kind, to the City of Madison Fire Department in Wisconsin.

The Bottom Line on WHKS Stock

One word is seldom mentioned in all the hubbub surrounding Oshkosh mail trucks. That word is Ford, as in Ford Motor Company (NYSE:F).

Ford joined the Oshkosh bid back in 2018. Ford started delivering electric trucks to the Postal Service in 2001. It’s unclear how much of the winning bid Ford might receive, but the company insists it will dominate the commercial market for electrics.

WKHS stock is up. But that may be from a short squeeze, with 24% of shares held short on June 22. If Redditors can engineer a squeeze, those who placed a losing bet on WKHS stock could get out with a profit.

InvestorPlace’s Louis Navillier believes WKHS stock has prospects beyond the USPS contract.  I don’t. To me, Workhorse and Lordstown Motors (NASDAQ:RIDE) always felt like stalking horses for the EV ambitions of Ford and General Motors (NYSE:GM). As those companies are now all-in on EVs, I don’t see room for a start-up from WKHS stock.

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On the date of publication, Dana Blankenhorn did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Dana Blankenhorn has been a financial 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. Follow him on Twitter at @danablankenhorn

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