After initially falling Monday, Workhorse stock eked out small gains on both Tuesday and Wednesday, bucking the tide of an ebbing market. No such luck today, though. The stock just closed trading down 12.6%.
Why did Workhorse do so well earlier in the week, but not today?
The first question is easier to answer. Mid-Wednesday morning, Lordstown Motors, a new electric-car company founded on the remains of GM's Lordstown auto plant and licensing technology from Workhorse, inked a deal to sell 250 "Endurance" electric pickup trucks to utility FirstEnergy, according to InsideEVs.
No word yet on whether more sales are in the offing -- and even this deal is still only in the form of a Letter of Intent and not yet an actual sales contract. Still, if all goes well, this development could be great news in the long term both for privately held Lordstown and for the company collecting royalties from it -- Workhorse Group.
As for the nearer term, though, consider the following:
Workhorse Group is a $270 million company with $25 million in net debt, less than half a million dollars in annual revenue and no profits whatsoever. It's exactly the kind of company that could be hurt badly by a coronavirus-fueled economic crisis.
With every other stock on Earth (seemingly) falling on fears that the coronavirus outbreak is the black swan event that pushes us into recession, it's only natural that an indebted, unprofitable company with still-tenuous growth prospects like Workhorse would be one of the casualties.