In an effort to spark some much-needed relevance, commercial fleet electric vehicle (EV) manufacturer Workhorse (NASDAQ:WKHS) just delivered two major announcements. First, the company has begun production of its cargo van at a manufacturing facility in Union City, Indiana. Management also just announced a partnership with Smyrna Truck, its first certified EV dealer in Georgia. Nevertheless, WKHS stock is falling today, likely due to viability concerns.
According to an accompanying press release, Workhorse will soon see its flagship W750 electric van roll out of its Union City facility. Further, management stated that the company is poised to “ramp up production” for the cargo van in the coming months. Leadership also expressed optimism regarding its dealer partnership with Smyrna, which will serve to expand its customer network.
Fundamentally, this news couldn’t have come soon enough for WKHS stock. As management stated in its fourth-quarter 2022 earnings report, Workhorse struggled with shipping delays of its W4 CC configurable electric truck. Therefore, the EV maker had to deliver some substantive news to help assuage jittery investors.
Unfortunately, though, neither the W750 production announcement or the dealership partnership are moving the needle positively for WKHS stock. Instead, shares are falling today, down about 2% as of this writing. That’s likely not the response management had hoped for.
WKHS Stock Faces a Credibility Conundrum
On paper, the forward momentum underlying Workhorse’s announcement should swing WKHS stock higher. However, the volatility in shares today may signify that the news is a case of too little, too late.
On the technical front, the W750 suffers a major inconvenience as well (although it does offer considerable utility thanks to its 750 cubic feet of cargo area). At Level 2 charging, recharging the EV takes approximately 11 hours while, at Level 3, recharging takes between three and four hours. That’s not ideal, keeping the W750’s range of about 150 miles in mind.
To be fair, workarounds exist for fleet operators committed to going green, such as buying several W750s. However, the company’s prior production struggles may impose a credibility challenge for prospective buyers. Unfortunately, the price action of WKHS stock also confirms this challenge. Basically, investors are in “show me” mode rather than “tell me.”
Finally, Workhorse’s failed bid to secure the much-discussed U.S. Postal Service (USPS) contract to replace its aging fleet of mail carriers may continue to haunt the company.
Why It Matters
Right now, TipRanks shows that WKHS stock carries a consensus “moderate buy” view based on three opinions. Additionally, the average price target for Workhorse lands at $3.17, representing more than 300% upside potential. However, prospective traders should take this forecast with a grain of salt.
Essentially, it comes down to timing. The most recent analyst rating on the site (a reaffirmation of a buy) came out on May 16, 2023. Given that WKHS has slipped more than 11% since then, the appetite for shares stands at risk of fading.
On the date of publication, Josh Enomoto 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.
