WKHS Stock Alert: Workhorse Rises on EV Contract

Workhorse (NASDAQ:WKHS) rose more than 25% today after the commercial electric vehicle (EV) announced that it had received a procurement contract from a government agency Sourcewell for chassis and cabs of classes 4–8 and related equipment and service.

“Sourcewell is committed to streamlining the procurement process and consolidating the purchasing power of numerous agencies into a single, cooperative group,” Workhorse said. “Their contracts are competitively bid to meet the competitive bidding needs of participating firms.”

The contract allows Workhorse to expand its reach into the government, education and nonprofit sectors in the U.S. and Canada. In addition, Sourcewell now has access to Workhorse’s W56 flatbed trailer, W750 flatbed trailer and W4 CC cab chassis.

WKHS share: Workhorse receives Sourcewell order

Although the contract opens up more business opportunities for Workhorse, the company has not yet announced any additional vehicle orders. The possibility of additional orders from the contract is the reason for the increase in WKHS stock today.

The contract will be concluded approximately two weeks after Workhorse confirms compliance with the Nasdaq 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 was unable to regain compliance organically. WKHS stock began trading on a 1-for-20 reverse stock split on June 17, which drove the share price higher.

At the same time, Workhorse is not out of the woods yet. In its first-quarter earnings results, the company cast considerable doubt on its ability to continue as a going concern over the next twelve months. This was done on revenue of $1.33 million and selling expenses of $7.44 million, resulting in a gross loss of $6.1 million. The net loss for the quarter was $29.15 million, compared to $24.99 million a year earlier.

In other words, Workhorse is still a long way from becoming profitable. Analyst estimates for the company extend to 2026, and then it is still expected to be unprofitable with a GAAP EPS loss of 39 cents.

One key macroeconomic catalyst that could benefit Workhorse is falling interest rates, which would lead to lower borrowing costs. However, investors should not base their entire investment thesis on this one factor.

At the time 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 author and are subject to InvestorPlace.com Publishing guidelines.

At the time of publication, the responsible editor had no (direct or indirect) positions in the securities mentioned in this article..

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