Workhorse (NASDAQ:WKHS) stock is up more than 25% today after the commercial electric vehicle (EV) company announced that it had been awarded a procurement contract from government agency Sourcewell for Class 4-8 chassis and cabs and related equipment and service.
“Sourcewell is dedicated to streamlining the procurement process and combines the purchasing power of numerous agencies into a single cooperative group,” said Workhorse. “Their contracts are competitively solicited to meet the public bidding requirements of participating entities.”
The contract will allow Workhorse to expand its reach to government, educational and nonprofit sectors in the U.S. and Canada. In addition, Sourcewell now has access to Workhorse’s W56 step van, W750 step van and W4 CC cab chassis.
WKHS Stock: Workhorse Awarded Sourcewell Contract
While the contract opens up Workhorse to more business, the company hasn’t announced any additional vehicle orders yet. The possibility of additional orders from the contract is what’s driving the price action behind WKHS stock today.
The contract comes about two weeks after Workhorse regained compliance with Nasdaq’s minimum bid price requirement. The company was able to regain compliance after having a closing price of at least $1 for at least 10 consecutive trading days. However, it wasn’t able to regain compliance organically. WKHS stock began trading on a 1-for-20 reverse-stock-split basis as of June 17, lifting up its stock price in the process.
At the same time, Workhorse isn’t out the woods just yet. In its first-quarter earnings, the company raised substantial doubt about its ability to continue as a going concern over the next 12 months. That came amid sales of $1.33 million and a cost of sales of $7.44 million, resulting in a gross loss of $6.1 million. Its net loss for the quarter totaled $29.15 million compared to $24.99 million a year ago.
In other words, Workhorse is still far from achieving profitability. Analyst estimates for the company go out until 2026, when it is still expected to be unprofitable with a GAAP EPS loss of 39 cents.
A major macroeconomic catalyst that Workhorse could benefit from is falling rates. That would result in a lower cost of borrowed capital. However, investors shouldn’t base their entire investment thesis on this one factor.
On the date of publication, Eddie Pan did not hold (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 InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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