There's an operational roadblock as well. But Workhorse isn't a better buy simply because Workhorse stock is cheaper, because that cheaper stock price itself impacts the longer-term outlook. (The inverse of this vicious cycle has been cited as a key contributor to the success of Tesla ( TSLA).) This isn't a process that plays out instantly, and another "green wave" could change Workhorse's outlook in a hurry. The lower stock price means either Workhorse raises less capital or creates more dilution, which makes investors more reticent to step in, and on and on. But when the market knows dilution is likely at some point, that in and itself can provide an overhang on the stock. The only real way to do so at this point is to sell equity Workhorse's positioning is too precarious for even convertible debt. The current cash balance almost certainly doesn't get the company through to 2025, at which point the roadmap would be complete: an $8M/month rate only provides cushion through early 2024, and that doesn't include the need for spending behind any initial product launches (or, in the case of the C-1000, a re-launch).Īnd so Workhorse is going to have to raise capital. Dauch and Workhorse at the moment are preparing a three-year "product portfolio roadmap". In even the best-case scenario, the C-1000 doesn't return to full production until next year. A cash burn rate in the range of $8 million per month, as discussed on the Q3 call, suggests the balance sheet is in reasonably good shape.īut the problem is that $230 million simply doesn't seem like enough. Workhorse closed the third quarter with $230 million in cash, with just $27.5 million in remaining debt. The debt-for-equity swap and the reduction in cash burn do help in terms of the Workhorse balance sheet. Both financially and operationally, the long decline, in and of itself, can create further downward pressure. Perhaps the biggest problem for the Workhorse stock price at the moment is precisely the Workhorse stock price. The concern is whether those changes will prove to be too little, too late. In that context, there is a silver lining simply in the fact that the company finally is making changes. And the company has focused more on its balance sheet, reducing its monthly cash burn rate by about 30%, per the Q3 conference call, while also exchanging most of its convertible debt for equity.Īs bad as 2021 was, it was hardly an outlier in terms of Workhorse's long track record of disappointment. (This is a company whose original guidance for 2018 was for 2,000 deliveries it still hasn't hit the 500 mark on a cumulative basis.)ĭauch has undertaken a top-to-bottom review of the company, which includes potentially significant changes to the C-1000 program. Dauch has brought on a number of new executives, which hopefully provides a much-needed infusion of talent for a company whose execution has been abysmal since the pivot to EVs back in 2013. Workhorse hired a new Chief Executive Officer, Rick Dauch, with a long and successful track record in the automotive industry. If there's any good news from the year, it's that the company has to at least some degree reset. Combined with a broader swoon in electric vehicles over the end of the year, the 78% decline in WKHS stock in 2021 isn't all that surprising. Securities and Exchange Commission as well. Workhorse has confirmed that it's the target of an investigation by the U.S. Political posturing around the selection provided some hope, and Workhorse filed a lawsuit challenging the decision, but in September Workhorse threw in the towel.Ī week later, the company suspended production of its C-1000 model, while also recalling 41 vehicles that already had been delivered. Most notably, in February Workhorse lost out on a major contract for the United States Postal Service, with USPS going with Oshkosh ( OSK) instead. Simply put, 2021 was a disaster for Workhorse. There is a path toward long-awaited success here, even if that path at the moment looks a bit too narrow. 2022 will be a pivotal year, and new management gives the company at least a chance to spend this year changing its reputation with customers and investors. Yes, WKHS stock is cheaper - but given its positioning, that declining stock price itself creates problems going forward.Īll that said, it is still too early to write Workhorse off entirely. The balance sheet has real concerns, and competition is stiff and getting stiffer.Īnd even at the lows, I'd personally back that bearish take. Its flagship vehicle has been pulled from production. This, after all, is a company that has made multiple missteps since it pivoted to the commercial electric vehicle market back in 2013. And yet, even with that decline, it's still easier to make the bear case for WKHS than a bullish argument. Shares have fallen 80% since the beginning of 2021. ( NASDAQ: WKHS) stock closed Friday below $4, at its lowest level in more than 18 months.
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