The history of Workhorse Group Inc.’s (NASDAQ:WKHS) stock has been full of anticipation and speculation, but with very little delivery. The potential has always been there for the Ohio based electric truck maker but one thing or another usually gets in the way of Workhorse following through on its guarantees to shareholders. The stock has had a good run over the past year, as many electric vehicle companies have, riding on the coattails of the popularity of industry leader Tesla ($149.93|-3.55%). Over the past 52-weeks, Workhorse has seen a 275% increase in stock price which is way ahead of the 18% return from the S&P 500 over that same time period. But how much of this is based on speculation of the future of this industry, rather than actualized company success.
The August 10th earnings call did little to improve Workhorses future outlook despite how the CEO tried to make it sound. Shares are up 7% since that date but much of that spike can be attributed to the SPAC IPO announcement of Lordstown Motors, a company of which Workhorse Group owns 10% of. It was reported that Lordstown already has pre-orders in the amount of $1.4 billion, of which Workhorse will receive a 1% royalty for the first 200,000 vehicles. While this could theoretically be valued in the hundreds of millions of dollars, it may be several years before Workhorse sees any of that money come its way.
Investors are ever hopeful that the USPS contract to replace its delivery fleet of postal trucks will at least partially be awarded to Workhorse by the end of this year. With the recent unrest amongst USPS workers, it may be into 2021 before details of that contract are actually worked out. Until then, Workhorse still has to increase its production facilities in order to be able to meet the requirement of a large scale order.
There is competition on its way as well. Currently, Workhorse has some of the only electric last-mile delivery trucks on the road but that competitive advantage is about to be shattered as larger players move into the space. Tesla’s semis are reportedly scheduled to be on the roads at some point in 2021, and other companies such as Volvo are also joining the movement. On Monday, it was announced that Hyliion would be merging with Tortoise Acquisition Group (NASDAQ:SHLL) to create a new SPAC IPO to debut later under ticker symbol SNPR. Hyliion builds full-electric or hydrogen fuel cell trucks and should be a disruptive new name in the electric vehicle landscape. Shares of SHLL were up over 30% after the announcement.
The future is uncertain for Workhorse who may just be left behind by companies with much more money and brand value. While Hyliion will need to build its customer base, let us not forget that the hottest SPAC IPO from earlier this year Nikola (NASDAQ:NKLA) will also eventually have its electric trucks on the roads. While Workhorse has no chance of competing with established brands like Tesla and Volvo, they may be able to carve out a niche in the smaller market last-mile delivery space that is very much in need of an electric injection.
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