(Bloomberg) — Workhorse Group Inc. is headed for its biggest weekly decline ever as investors brace for the electric vehicle startup’s quarterly earnings results due for release on Monday.
The focus is likely to be more on the company’s recent loss of a key contract with the U.S. Postal Service rather than its financials. The shares sank 52% in two days this week after the USPS said Oshkosh Corp., not Workhorse, would get a contract to build new vehicles for mail carriers. They rebounded 25% on Thursday after a congressman said he was trying to reverse the decision, only to resume the drop on Friday. The stock is set for a more than 50% weekly decline.
Volatility has been the norm for Workhorse. The shares saw major ups and downs on their way to a 3,646% rally in 2019 and 2020 combined, riding a wave of investor enthusiasm for all things related to electric cars and clean transportation. Tesla Inc.’s surge toward a market value now exceeding $650 billion prompted a scramble for the next cult stock in the industry.
Workhorse fit the bill, despite boasting only scant revenue. Holding onto those investors may get more difficult if the growth narrative is perceived to be faltering, as shown by the exodus this week following the USPS news.
“The conversation around the contest, whether Workhorse was selected as the supplier months back, and how similar the Oshkosh truck looks to the Workhorse solution will all dominate now,” Roth Capital Partners analyst Craig Irwin said.
Given the USPS situation, analysts will hone in on other potential revenue sources for the Loveland, Ohio-based company.
“We will be looking at potential orders from new and existing customers that will increase Workhorse’s backlog,” RF Lafferty analyst Jaime Perez said in a phone interview. “The other key question is their cash burn rate.”
Analysts on average expect a fourth-quarter adjusted loss of 14 cents a share, on revenue of $1.2 million, according to data compiled by Bloomberg.
“As far as fourth quarter is concerned, I don’t expect big numbers, and they will probably have tepid results,” Irwin said.
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