The delay of the USPS decision should not be seen as a slight to Workhorse so the drop in its stock and the analyst downgrade seem at this point to be a bit of an overreaction. While October 13th marked the original date that the contract was to be decided, USPS has delayed its decision potentially another two months. Irwin downgraded Workhorse from a buy rating to a neutral rating and decreased his price target from $33 to $27. Roth analyst Craig Irwin announced a downgrade to Workhorse’s stock after USPS revealed that its decision for the contract may not come until the end of the year. One thing that may be an issue for investors is if the long-awaited USPS delivery vehicle contract is not awarded to Workhorse Group after months of anticipation. Shares are still up over 660% over the last 52-weeks so a pullback here and there is not hurting investors too much right now. Wild fluctuations can be expected from high growth stocks that remain unprofitable, a category in which Workhorse finds itself. On Tuesday the stock took a dive as Workhorse fell by 11.10% and since then it has continued to bleed, closing at $22.30 on Thursday, an accumulated fall close to 25% for the week. NASDAQ:WKHS has had a good run over the last couple of months, reaching new all-time highs in September as momentum behind the electric truck manufacturer was beginning to build up. USPS has announced that the much anticipated zero-emissions contract will be delayed until later in the year.A Wall Street analyst downgrade has investors selling off as skepticism on Workhorse resurfaces.NASDAQ:WKHS has dropped nearly 25% this week.Dauch also said Workhorse was trying to plan what vans it could produce in the future. The company suspended further sales until the testing was complete, took back the 41 vehicles and has slowed production to two trucks a week. Workhorse sold 41 of the vans this year before it had finished making sure the C-1000 design complied with federal safety standards. He said the design was “not robust nor is it profitable.” Dauch said Workhorse was trying to decide whether to continue producing the C-1000 electric van, which it had hoped to sell to shipping companies like Federal Express and UPS. Lordstown has struggled to put its truck into production and is itself facing investigations into its business by the S.E.C. Burns then left Workhorse and formed Lordstown Motors, and planned to use the plant to produce an electric pickup truck. and the Justice Department.Īlthough it is small, Workhorse gained prominence in 2019 when its founder, Steve Burns, agreed to buy an auto plant in Lordstown, Ohio, that had been idled by General Motors, and President Donald J. He said Workhorse was cooperating with both the S.E.C. “At this point, we cannot predict the eventual scope, duration or outcome of these matters.” with respect to this investigation,” Workhorse’s chief executive, Rick Dauch, said on a conference call with financial analysts after the earnings announcement on Tuesday. “We have not received any subpoena or other request for further documents from the D.O.J. Of the Justice Department’s investigation, Workhorse said only that it was “related.” inquiry is related to trading in Workhorse stock before the announcement in February that it had failed to win a large contract from the United States Postal Service, a development that caused a steep drop in Workhorse shares. Workhorse said in a regulatory filing on Monday that it was being investigated by the Securities and Exchange Commission and the Justice Department. The company also reported negative revenue of $576,600 because it had to give customers refunds for vans that it was required to take back and modify in order to comply with federal safety standards. Workhorse Group, a small producer of electric vans that has come under investigation by federal authorities, on Tuesday reported a loss of $81 million for the three months ending in September as a result of rising operating costs and a production stoppage related to a recall.
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