Shares of Workhorse Group Inc (NASDAQ: WKHS) are dropping after a 300%-plus spike from one-year lows. The pullback comes on the heels of the Company reporting mixed Q1 financial results summed up by lower than expected revenues as well as narrowing net loss.
WKHS Stock Catalysts And Price Analysis
The Company has been on the spot in recent months on attaining significant milestones that underscore long-term prospects. Key among the milestones include the formation of an alliance with Duke Energy as part of an effort of offering eFleet solutions.
The cost-effective electric mobility solutions provider has also sought to strengthen its balance sheet by tapping into the debt markets consequently raising $2.9 million in net proceeds. Workhorse Group has also inked a strategic partnership with Prefix Corporation in a bid to finalize the N-GEN Production Process.
After a rollercoaster first quarter, Workhorse Group stock has exploded in the second quarter, if a 300%-plus spike from one-year lows is anything to go by. A pullback from 2019 highs could as well be because of investors taking profits after the gigantic rise.
The ongoing pullback s staring at support at the $1.80 mark, below which the stock could plunge back to the $1.50 level. The stock finding support above the $1.80 mark could elicit some buying pressure that could result in Workhorse Group posting another leg higher.
What Does Workhorse Group Do?
Workhorse Group is a technology company that develops and distributes electric mobility solutions. As an original equipment manufacturer, the Company designs and builds high-performance battery electric vehicles. The Company also develops cloud-based real-time telematics performance monitoring systems, designed to optimize energy and route efficiency.
Q1 Operational Milestones
Workhorse Group is yet again on the spotlight on confirming that it made significant progress in Q1 as part of a transition into a production-focused electric vehicle manufacturer. Thanks to a strategic partnership with Duke Energy, the Company is now in a position to come up with cost-competitive alternative electric mobility solutions.
“In the more immediate term, we remain focused on our ‘Trucks First’ initiative, which has enabled us to make significant advances in all phases of the manufacturing process. Most notably, our renewed partnership with Prefix Corporation has us in solid positioning to begin producing fully-redesigned vehicles that now incorporate additional features that will streamline cost and increase production efficiency,” stated CEO Duane Hughes.
Amidst the milestones achieved in Q1, Workhorse Group generated revenues of $346,000, down from $560,000 generated a year earlier. The decline is attributed to a decline in trucks delivered in the quarter.
Total operating expenses in the quarter shrunk 27% to $3.5 million from $4.7 million reported last year. The electric mobility solutions provider sunk into a Q1 net loss of -$6.3 million a slight improvement from a net loss of -$6.4 generated a year earlier.
Strategic Alliances Impact
In trying to build on Q1 achievements, Workhorse Group has entered into an agreement with General Motors for the acquisition of a Lordstown Ohio Complex. The acquisition according to the CEO will strengthen the Company’s leadership role in the EV community.
Workhorse Group intends to use the new facility to construct a commercial electrical pickup that blends with Lordstown’s manufacturing expertise. The acquisition comes on the heels of the Company inking a strategic partnership with Prefix Corporation for the development and reduction of NGEN series electric delivery van.
The two companies are in the process of setting up an underlying platform that will support 1200 ft3 1,000ft3 and 650 ft3 capacity vans.
“This strategic partnership provides Workhorse with a proven partner that will allow us to remain on schedule to fulfill existing orders we have from our key customers like UPS and DHL. Through our previous partnerships with Prefix, we’ve already worked closely together and witnessed the quality of their work firsthand,” added Mr. Hughes.
Workhorse Group has made significant progress on its bid to develop reliable and cost-effective electric mobility solutions. The inking of strategic partnerships opens the door for the Company to develop electric vans.
While the stock has taken a significant hit in recent weeks, the pullback might as well have presented an opportunity to buy the stock at a discount given the Company’s tremendous potential in the EV space. The stock is likely to continue powering higher once the correction phase comes to a halt.
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Disclosure: We have no position in WKHS and have not been compensated for this article.