WKHS stock will see $10 before $25. USPS deal is a no-go, here is why. – Idaho Reporter

NASDAQ

WKHS stock will see $10 before $25. USPS deal is a no-go, here is why.

Shares of Workhorse Group (NASDAQ:WKHS) are under pressure, again. Here is what is going on and why you should pay attention on your portfolio.

Entire EV sector was on the run for the past 10 days. NIO shares almost doubled in value, XPEV more than doubled but WKHS is hovering between $15 and $20. It is a waiting game for WKHS, and the only real catalyst, USPS deal, is not in sight.

Shareholders feel like they are missing out on other opportunities while their money is trapped in Workhorse stock.

No one really believes anymore that Workhorse will get the long awaited USPS deal. Except for the people that are in love with WKHS stock. And we all know that you shouldn’t fall in love with stocks.

This may cause a significant move in WKHS stock price

While getting USPS deal would be a great thing for both company and stockholders, in my eyes it is not such a big thing if WKHS ends up without this contract. Here is why. If USPS decides to go with WKHS you need to have in mind that Workhorse would be obliged to give a guarantee for the fulfillment and actually be able to deliver 180,000 NGDVs over five to seven years.

If we divide 180,000 by 7 that would be around 25,000 vehicles per year. It is not doable. This is basically a science fiction.

Previously Workhorse said how they got a 500 vehicles order from Pritchard Auto Company, but failed to acknowledge how they delivered only 5 vehicles in Q2. Five vehicles for the entire quarter?

Workhorse claimed that, prior to an outbreak of the novel coronavirus among its employees and other unexpected hurdles, it anticipated delivering 300 to 400 vehicles last quarter. Still, the bottom line is that the company only delivered seven vehicles in Q3 and said that it will be able to deliver the other 293 to 393 trucks previously targeted only in 2021.

source

So, instead going for the jugular, they are still wasting their time and money on God knows what. But here is the thing, I am also wasting my time talking about deliveries when there might be another, bigger, problem for Workhorse going forward.

According to The Business Journal, Lordstown Motors (LMC), is accused of deploying a “Trojan horse” scheme in order to steal intellectual property from Karma Automotive. Workhorse previously granted LMC a three-year exclusive license of certain intellectual property for an initial equity stake of 10% in LMC. This means that WKHS owns 10% in LMC.

But there is more to this. Workhorse’s founder and former CEO, Steve Burns, actually formed a new private company called Lordstown Motors Corp. So, these are all pretty much the same people.

 

And now that Lordstown Motors is taken to court by Karma Automotive that USPS deal looks even more like a sci-fi. Do you really believe that USPS would sign an agreement with such a troubled company?

And who is Karma Automotive? Karma Automotive is an American company producing luxury EVs. Karma is created from the assets of Fisker Automotive after its failure. Yes, that Fisker, previously owned by Henrik Fisker, the same guy that now runs Fisker Inc.(NYSE:FSR).

What now?

After troubling Q3 results WKHS stock already started losing steam, losing 6.34% on Friday. Monday morning could be another selloff for WKHS because there is really no big catalyst in the near future. It’s a recalibration of expectations — not a recalibration of fundamentals, but of expectations — and that will pull some serious wind out of Workhorse’s valuation.

13 Comments

  1. Joe Irwin

    The low production C-Series vans are made in a former navistar plant in Union City, IN with no automation. The USPS mail trucks would be made on the unused automated production lines and robotics in the Lordstown plant which have the capability of producting 500k vehicles per year that are currently just sitting there collecting dust waiting for the mail truck contract.

    The workhorse mail truck IS the lordstown Endurance pickup with a different body and interior on the exact same chassis. LMC is currently using 10% of the plant to make 40k Endurance pickups… they other 90% of the automated production is waiting to make the mail trucks.

  2. E. Sandoval

    As a person who has filled this stock closely, your research and stated facts are absurd. You have absolutely no idea of what your talking about.Ford transit van. This is a 6 year old RFP 2 companies are up for winning the contract. Ford is not even in the running as it was not selected to build a prototype. Do your research before you write this garbage.

    • weetoes

      Do you not think for the more rural routes the NON EV truck ford submitted would likely replace the old trucks on those routes where charging an EV would be an issue? I don’t see this contract going solely to one company

      • Joe Irwin

        The electric mail truck can have a range up to 250 miles depending on the number of battery modules installed. They are charged overnight at the post office branch they are assigned to.

        The average rural route is 65 miles. There is no need or logical reason to have a gas powered vehicle any longer.

  3. You didn’t even make your point stated in this article’s title…

  4. N.

    Fords not even in the running major issue with your slanderous bs

  5. Daniel Sandker

    On Nov 4 this clown Robert Reed wrote an article about why FSR (Fisker) is a loser stock. It was $10 sp. It’s gone up 70% since then. His article is completely fact-less. Just a desperate short seller.

  6. Matt N

    NO selloff today (Monday 16th) as you predicted.
    And yes, there are good chances that Workhorse could still get the contract as they had been shortlisted.

  7. John A

    No selloff Monday and another run Today. Interesting article

  8. Rajasekar Thangaraj

    Well said!!

  9. ak1134

    Contract Split
    Personally I see this award going to Ford/Osh Kosh Group and Workhorse. I see the split going this way because I believe the nature of some rural areas w longer routes will use a Gas/ ICE. ALthough an electric vehicle can hold a 150 mile charge the goal is to be able to allow the vehicle to have range and use conventional gas if needed. The other part of the contract will address metropolitan and suburbs where the average route is 17 miles, will be certainly awarded the EV version.

    Lawsuit
    As for a lawsuit, WKHS is bidding on the contract not LordsTown motors. CFO Steve Schrader even stated if we want to utilize Lord’s Town we’re certainly able to negotiate with them. HE also stated they have a million sqft space in Loveland that they can get up and running and they have options.

    Political State of Play
    I believe politically speaking, USPS was waiting until the election was over to issue its contract award for a few reasons.
    1) to avoid politicizing issuing an award to an Ohio city a swing state.

    2) The house stimulus bill that passed in the house but failed in the senate, required the USPS to ,”The bill requires that 75 percent of the new fleet be electric or zero-emission vehicles. For medium/heavyweight vehicles, the electric/zero emissions requirement would be 50 percent by 2030 and 100 percent by 2040. The bill would require the “Buy America Act” provisions with regards to vehicle procurement.”….. Reading this i find it hard to believe that they deviate from this negotiating point and they move to ordering hundredsof thousands Gas engines. the whole point of this is to cut costs in regards to repairs, fuel, service which are at roughly 700 million yearly currently. The third option a plug-in Hybrid Turkish Karsan/Morgon Olson is just not a feasible option… Can you imagine the signature delivery vehicles that deliver mail to your doorstep being Turkish branded?

    3) When this project started, the Budget was about 6 billion in 2015. Five years later, the USPS acknowledged the price will be higher due to inflation and import tariff increases on parts and material. The new estimate is said to be about 8-9 billion which is acknowledged in the new budget which is why I believe this deal is tied to the signing of the stimulus.

    Financing
    As for financing, Workhorse just signed 1/4 billion in financing at 4% with convertible price at $34 a share. The financing deal has language addressing the USPS deal stating if they win a 42,000 vehicle award or more the interest rate drops to 2%.

  10. adam davis

    WRONG!

    wkhs Just hit 25$ on Nov 20th. .

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