We told our readers and subscribers in July to ignore Hindenburg Research when it comes to WKHS stock. We said that the dips were to be purchased as Workhorse Group has many upcoming catalysts to drive WKHS stock higher and squeeze the shorts. With the news that Lordstown Motors is going public with DPHC, WKHS stock is gearing up for new highs. In this article, we explain why there is a lot to like with Workhorse Group.
First up, here’s a little background info for those not familiar with WKHS stock. Workhorse is a technology company focused on providing electric vehicles to the last-mile delivery sector. As an American original equipment manufacturer, the company designs and builds high performance, battery-electric vehicles including trucks and aircraft.
Workhorse also develops cloud-based, real-time telematics performance monitoring systems that are fully integrated with its vehicles and enable fleet operators to optimize energy and route efficiency. All Workhorse vehicles are designed to make the movement of people and goods more efficient and less harmful to the environment. Workhorse has seven patents already granted and four pending.
Lordstown Motors SPAC
Lordstown Motors is going public with special purpose acquisition firm DiamondPeak Holdings Corp. The deal implies a $1.6B value for Lordstown and $675M of the proceeds will be used to fund the production of the Endurance model. WKHS stock has a 10% non-dilutive equity stake in Lordstown valued at $160 million. However, we expect once RIDE starts trading that we shall see a similar move like in Nikola making Workhorse’s stake much, much more valuable.
Lordstown Endurance will be the first full-size electric pickup truck designed to serve the U.S. commercial fleet market with initial production expected in the second half of 2021. Following the deal closing, the name of the combined company will be Lordstown Motors Corp and shares will trade under the symbol RIDE. Steve Burns, Founder and Chief Executive Officer of Lordstown, said:
“We are thrilled with the opportunity to build Lordstown Motors into a top-tier electric truck company that is highly differentiated from the competition. We are uniquely positioned to be a leader in the industry, with our first vehicle, the revolutionary Lordstown Endurance. Our all-electric full-size pickup truck delivers the equivalent of 75 miles per gallon and has been systematically engineered and competitively priced specifically for the large commercial fleet market, which includes companies in manufacturing, contracting, utilities, transportation and delivery, and agriculture, among others. Since its unveiling just over a month ago, the Endurance has been met with enthusiastic support, and to date, we have secured $1.4 billion of pre-orders. Our platform is rooted in sustainability, and the entire Lordstown team is committed to ensuring we contribute to a healthier planet for generations to come.”
To accomplish Lordstown’s mission, in November 2019 the company purchased the former General Motors Lordstown Assembly Plant, a 6.2 million square foot facility estimated to be capable of producing in excess of 600,000 electric vehicles annually, with only modest incremental investment.
Lordstown is believed to be one of the first electric vehicle manufacturers to acquire a near production-ready plant. The Lordstown complex provides Lordstown with critical flexibility and line-of-sight to production, immediate access to a well-trained and highly capable workforce in Ohio’s Mahoning Valley, and positions Lordstown to be first to market.
To date, LMC has disclosed that it has received over 27,000 pre-orders for the vehicles representing over $1.4 billion of potential revenue. Lordstown has agreed to pay a 1% royalty on the first 200,000 vehicles sold, plus a 4% commission on 6000 Workhorse W-15 pre-orders that transfer to LMC as part of the IP licensing agreement.
LMC has agreed to prepay a portion of the license fee and an amount equal to $4.75 million to WKHS stock. This transaction marks the fulfillment of a vision that began in January of 2019 when Workhorse first approached General Motors about the Lordstown Complex.
WKHS Stock and USPS
Much of the excitement around WKHS stock concerns the US Postal Service. Workhorse Group is now the only medium-duty BEV OEM permitted and able to sell and deliver its vehicles in all 50 states, which it says should allow it to further distance itself as the first movers in the last-mile EV space.
Workhorse is now well-positioned for the potential contract from the U.S. Postal Service for its Next Generation Delivery Vehicle, which could be for as many as 180,000 vehicles, especially after completing the Federal Motor Vehicle Safety Standards (FMVSS) testing for its C650 and C1000 all-electric delivery vans. Workhorse Group is the only American all-electric OEM designing and manufacturing last-mile delivery vehicle to complete this testing.
An announcement from the USPS should come sometime next month. WKHS stock is the only pure EV player and 0% Emissions – which are the two main criteria in getting the contract. President Trump is also a factor with the upcoming election and he needs a win in Ohio. With Workhorse Group based in Ohio along with Lordstown Motors a favorite of Trump’s, the contract looks to be a sure-thing from reading the tea leaves.
Workhorse and Hitachi
Workhorse and Hitachi just teamed up to assess the company’s manufacturing, operational, and supply chain capabilities in support of increased production requirements. Also, Hitachi Capital America will assist in developing a national dealer network and support Workhorse’s sales with vehicle financing options for dealers and customers. Workhorse CEO Duane Hughes said:
“With Hitachi’s innovation and invaluable expertise in EV technology, smart factory automation, and digital technologies, Workhorse is primed to build on our early leadership position as the only last-mile EV distributor selling vehicles for commercial use across the country. In addition, we believe Hitachi can help the Company drive customer orders as a well-known and respected player in the commercial leasing and finance industry, and we are looking forward to benefiting from their expertise.”
WKHS stock remains one of the cheapest EV players for investors to bet on. The company has a market cap of just $1.95 billion with $105 million in cash. Mr. Market is not pricing in Workhorse Group’s 10% stake in Lordstown Motors or a contract from the USPS, which is not a matter of if, but when. As things currently stand, BTIG Research has a $26 price target and ROTH Capital a $27 target. WKHS is gearing up for new highs and it’s looking sooner rather than later, especially if we get BIG news next month. With 24% of the float short, the short squeeze is going to epic.
As always, good luck to all (except the shorts)!
We will be updating our subscribers as soon as we know more. For the latest updates on NASDAQ:WKHS, sign up today!
Disclosure: We have no position in NASDAQ:WKHS or any of the securities mentioned. We wrote this article ourselves and it expresses our own opinions. We are not receiving compensation for it. We have no business relationship with any company whose stock is mentioned in this article. Insider Financial is not an investment advisor and does not provide investment advice. Always do your own research and make your own investment decisions. This article is not a solicitation or recommendation to buy, sell, or hold securities. This article is meant for informational and educational purposes only and does not provide investment advice.