Workhorse (NASDAQ:NYSE) gained 5.3% today on word that the company is filing a legal challenge to USPS’s contract decision. Back in February, WKHS stock tanked when USPS announced, in a surprising turn of events, that they’d be partnering with Oshkosh (NYSE:OSK) instead of crowd-favorite Workhorse. But this boost won’t undo February’s massive plummet, and it’s probably Workhorse’s final shot at survival.
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The deal from earlier this year was extra shocking because President Biden announced a desire for all federal vehicles to shift to electric soon. But Oshkosh doesn’t even make electric vehicles.
That makes the deal falling through especially dire for Workhorse. And we see very little chance of Workhorse wiggling its way back into this deal.
The recent price action also comes on the heels of Redditors forcing a big short squeeze in the stock, so shares are up significantly over the past few weeks.
It’s time to face the music and sell WKHS stock into this strength.
WKHS Stock: This Isn’t Really News
The rally behind WKHS stock won’t last. Workhorse has material weaknesses that won’t be fixed any time soon.
The manufacturing capacity is essentially zero. The company is barely making and selling a few vans each month.
The underlying technology is not the best, as evidenced by the fact that all major delivery partners who were considering working with Workhorse — like USPS and UPS (NYSE:UPS) — decided to leave them for someone else.
On top of that, the management team’s track record of overpromising and underdelivering dampens their track record.
Do Redditors change any of this? No.
They cause a temporary spike, short squeeze and then a drop back to pre-spike prices. That’s not durable or sustainable, and it surely doesn’t improve Workhorse’s tech or increase its manufacturing capacity.
The Legal Challenge
Does a legal challenge to the USPS deal change any of this? Also no.
Of course the company is going to file legal action against the decision. Without the USPS contract, the business is done. Workhorse has no choice but to file legal action.
The big question is whether it goes through and actually changes the decision — which is a very risky bet. And at this point in time, it looks very unlikely.
So, if nothing changes, Workhorse is a bumbling electric van startup that will inevitably be eaten alive by competitors and will soon end up in the EV graveyard.
Sell while the hype is here.
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On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
By uncovering early investments in hypergrowth industries, Luke Lango puts you on the ground-floor of world-changing megatrends. It’s the theme of his premiere technology-focused service, Innovation Investor. To see Luke’s entire lineup of innovative cutting-edge stocks, become a subscriber of Innovation Investor today.
