Workhorse stock analysis. WKHS
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In 2021, Workhorse stock soared to over $40 a share on optimism that it would win a $6 billion dollar contract with the United States Postal Service.
However, the manufacturer of electric trucks lost out to a company called OshKosh. As a result, the share price collapsed and today Workhorse has a valuation of 216 million dollars.
With 89 million of cash and investments and no debt, the enterprise value is only 127 million.
The issue is that electric vehicles are costly to make and Workhorse is nowhere near to making money. It produced only $7 million in revenue over the last 12 months while reporting a net loss of 120 million and negative free cash flow to the tune of 115 million.
The company burned through $38 million in the first quarter so with only 79 million of cash left Workhorse is dangerously close to bankruptcy. To survive, the company needs to raise more capital. But with a market cap below $300 million it’s hard to raise enough money without further tanking the stock.
The company did raise $19 million in Q1 but that just doesn’t seem enough when the company is losing almost double that. And this has been an incredibly unreliable company. It entered the EV market back in 2007 and between 2007 and 2019 it delivered only 365 vehicles. There were also allegations of fraud and insider trading.
#wkhsstock #stocks #investing
Join 9000+ investors: https://www.overlookedalpha.com
In 2021, Workhorse stock soared to over $40 a share on optimism that it would win a $6 billion dollar contract with the United States Postal Service.
However, the manufacturer of electric trucks lost out to a company called OshKosh. As a result, the share price collapsed and today Workhorse has a valuation of 216 million dollars.
With 89 million of cash and investments and no debt, the enterprise value is only 127 million.
The issue is that electric vehicles are costly to make and Workhorse is nowhere near to making money. It produced only $7 million in revenue over the last 12 months while reporting a net loss of 120 million and negative free cash flow to the tune of 115 million.
The company burned through $38 million in the first quarter so with only 79 million of cash left Workhorse is dangerously close to bankruptcy. To survive, the company needs to raise more capital. But with a market cap below $300 million it’s hard to raise enough money without further tanking the stock.
The company did raise $19 million in Q1 but that just doesn’t seem enough when the company is losing almost double that. And this has been an incredibly unreliable company. It entered the EV market back in 2007 and between 2007 and 2019 it delivered only 365 vehicles. There were also allegations of fraud and insider trading.
#wkhsstock #stocks #investing
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NewsTranscript
00:00 In 2021 Workhorse stock soared to over $40 a share on optimism that it would win a $6
00:06 billion contract with the United States Postal Service. However the manufacturer of electric
00:11 trucks lost out to a company called Oshkosh Defense. As a result the share price collapsed
00:17 and today Workhorse has a valuation of $216 million. With $89 million of cash and investments
00:24 and no debt the enterprise value is only $127 million. The issue is that electric vehicles
00:30 are costly to make and Workhorse is nowhere near to making money. It produced only $7
00:35 million in revenue over the last 12 months while reporting a net loss of $120 million
00:40 and negative free cash flow to the tune of $115 million. The company burned through $38
00:46 million in the first quarter so with only $79 million of cash left Workhorse is dangerously
00:52 close to bankruptcy. To survive the company needs to raise more capital but with a market
00:57 cap below $300 million it's hard to raise enough money without further tanking the stock.
01:03 The company did raise $19 million in Q1 but that just doesn't seem enough when the company
01:08 is losing almost double that. This has been an incredibly unreliable company. It entered
01:13 the EV market back in 2007 and between 2007 and 2019 it delivered only 365 vehicles. There
01:22 are also allegations of fraud and insider trading. That said the company got new management
01:27 in 2021. The new CEO Rick Dauk has a good track record from Delphi Technologies and
01:33 CFO Bob Ginnan said on the Q1 call that he thinks the company does have enough cash to
01:38 last until the end of the year. And just recently the share price has shown some signs of a
01:43 positive life. In fact the company managed to deliver 10 vans in Q1 and according to
01:48 the company conference call it delivered another 40 in May. On top of that the company has
01:53 finally received some orders for its aerial delivery drone Horsefly. The question is whether
01:58 the company has left it too late to turn around. With so little cash remaining the most likely
02:04 outcome is probably bankruptcy. But there's still a small chance of success and this stock
02:09 also has meme stock potential. It's got a high short interest and if recent momentum
02:14 continues the stock could easily provide some upside for meme traders. For now I give the
02:19 stock a neutral rating because it's too risky to buy it long term and too dangerous to short.
02:24 But these are my personal opinions not financial advice and I've currently got no position
02:29 in Workhorse stock. For more detailed investing ideas make sure to visit our website I Overlooked
02:34 Alpha.com