Workhorse Group Is About To Melt-Up
The Biden victory is a positive for the EV industry. His renewables-friendly platform will help not only the Workhorse Group Inc (NASDAQ:WKHS) but the entire EV market. Within that sphere, however, Workhorse is emerging as a leader not only in EV but in a very lucrative niche-market, the final mile. It’s C-650 and C-1000 final-mile specific all-electric vans are not only in production but selling. With an expected contract from UPS just around the corner, the stage is set for this stock to soar.
Workhorse Cautious On 4th Quarter, Bullish For 2021
Workhorse caught the market’s attention when it reported earnings. The company’s results were only in-line with expectations but the outlook for next year is brightening. In terms of revenue, the company brought in over $565K during the quarter. This is $1.25 million shy of the consensus but up from last year’s $4,000. That’s a big jump and evidence the company is actually making the vehicles it’s advertising. In terms of earnings, the company is still losing money but the amount is shrinking. The net loss was only $84.1 million in the 3rd quarter leaving the company on track for profits sometime in the calendar year 2022.
Looking forward, the company says it will not meet its previous guidance for the calendar 2020 year but there are mitigating factors. The primary hold up is batteries. The company’s battery supplier is not able to meet the ramp in demand and that is causing a bottleneck. The bottleneck is exacerbated by the COVID-19 pandemic and its impact on the production line. As of the release of the Q3 report, there were upwards of 30% of the workforce sick or quarantined waiting on test results.
Workhorse Ready For A Strong 2021
The impact of illness/COVID-19 on production may linger through the winter but the battery shortfall will not. Workhorse CEO Duane Hughes says they’ve already got new suppliers lined up and excess capacity will be available as soon as the first quarter of 2021. As for 2021, the company has set a production target of 1,800 vehicles and there is already evidence that demand will outpace current production capacity. Not only is the UPS contract still up in the air the company is getting new orders for trucks weekly.
Workhorse Group just received a purchase order for 500 vehicles from Pritchard Companies. Pritchard Companies is a leading seller of commercial vehicles and plans to add the vans to its EV lineup. The vans will be available nationwide (Workhorse is the only EV-van manufacturer that is approved for sale in all 50 states) and this may only be the first of many orders, it just depends on sales.
In other news, Workhorse has entered a strategic agreement with Hitachi (OTC:HTHIY) to review and improve the manufacturing process and other areas of note. The deal includes Hitachi financing of sales as well as in establishing a national dealer network. And then there is the UPS contract, worth an estimated $8.1 billion dollars, enough business for a partner like, say GM, to get into the picture.
A Strong Buy Signal Is Building In Workhorse Group
Shares of Workhorse popped on the Q3 news and are setting up for a big move. The only risk I see is in the 30-day moving average and the upcoming award of the UPS contract. Workhorse Group may not get it and too bad but, if they don’t, it doesn’t matter. The company is making a name for itself and now a top choice for any of the other dozen or major deliverers, not to mention everybody else that wants an EV final-mile specific work truck.
Looking at the chart the latest candle is confirming support at the $17.50 level and resistance at the $20.00 level with a definite bullish bias. The bias is seen in the indicators which are showing some strong bullish crossovers concurrent with each other. In the near-term, I would expect to see this stock move up and test the short-term EMA at least. If price action can get above that level we may see a nice really begin to gain momentum. If Workhorse gets the United Parcel Service (NYSE:UPS) contract its shares gain large double-digits very quickly.
