Workhorse Group (NASDAQ:WKHS) Stock: High Voltage EV Company?

Companies that produce electric vehicles are some of the hottest stocks in the market right now, so much so that virtually any company that is involved in the industry is seeing a lot of speculative activity. It’s easy to see the potential in EV (electric vehicle) companies, with carbon emissions a major environmental concern worldwide and numerous financial incentives for electric car buyers. Tesla (NASDAQ:TSLA) is the leader in the EV industry and has generated jaw-dropping returns for investors this year, but that doesn’t mean it’s the only name in the EV space that should be on your radar.

One up-and-coming EV company that has rallied over 400% this year is Workhorse Group (NASDAQ:WKHS). With lots of different EV-related stocks catching a bid, many investors are wondering whether or not a company like Workhorse Group is the real deal or just a flash in the pan. Let’s take a more in-depth look at Workhorse Group stock below and decide whether or not it is worth a look for your portfolio at this time.

Electric Powered Delivery and Utility Vehicles

A decade ago, it was hard to imagine relying on electric-powered vehicles for utility and delivery business needs. However, technology has come a long way since then, and it’s only a matter of time before we see more widespread use of electric vehicles on the commercial side of things. That’s where Workhorse Group comes into play. It’s a technology company that designs, manufactures, builds, sells, and leases battery-electric vehicles and aircraft. Workhorse also incorporated a cloud-based performance monitoring system to track its vehicles.

It’s easy to see why this company could be a potential disruptor in the EV space. It has proprietary technologies, scalable manufacturing thanks to a 265,000 square foot plant, and an ~$18 billion annual addressable market for delivery vehicles in the United States. Although this is a startup company that still has a lot to prove, it does have 400 of its “next-generation delivery vehicles” on the road already. The C-series delivery vans that the company produces have already drawn some interest from a few major companies. Workhorse already has a small partnership deal with Ryder (NYSE:R) and contracts with UPS (NYSE:UPS) and Fedex (NYSE:FDX), which could be the sign of good things to come.

USPS Deal and Lordstown Motors Potential Catalysts

A lot of the rally in Workhorse shares is related to companies like Tesla single-handedly sending shares of all EV companies higher. With that said, there are two potential catalysts for Workhorse that could send shares higher. First, the company is bidding to win a contract with the U.S. Postal Service. With many of the USPS vehicles over 20 years old and expensive to repair, the beleaguered government agency is looking into buying electric trucks. Workhorse is one of 4 contract proposals that the USPS is considering, although we know that the Postal Service is in distress at the moment and will likely end up going with a more “traditional” vehicle manufacturer.

Another exciting thing about Workhorse is that it owns a 10% equity stake in Lordstown Motors Corp., a company that wants to be the first to create an all-electric pickup truck. Lordstown Motors is going public shortly via a SPAC, or Special Purpose Acquisition Company, and could be a success like many other SPACs we’ve seen this year. If you are interested in Workhorse, it’s worth watching Lordstown’s reverse merger going forward since it could be a significant catalyst for the stock.  

Highly Speculative Investment

The truth about Workhorse is that it is a highly speculative stock. It has benefitted from the rise of Tesla and other EV companies, but it still has a long way to go before becoming a profitable business. One look at the Q2 earnings for the company should tell you where it currently stands. With only $92,000 in sales in Q2 and a quarterly loss of $0.12 per share, investors are seemingly betting on the future potential of this EV company if they are adding shares at these levels.

After an epic run over the last few months, investors should be cautious with Workhorse stock at this time. There are a lot of competitors in the EV industry, and the stock has risen on pure hype. Although some potential catalysts can send shares higher in the coming weeks, it’s probably wise to wait until this company delivers more confirmation that it is heading in a direction towards profitability before adding shares.