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Why Workhorse Group Stock Just Galloped 13% Higher

By Rich Smith – Jun 9, 2020 at 1:25PM

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Call it the "Nikola Tesla effect."

What happened

Shares of Workhorse Group (WKHS -5.67%), a tiny automotive start-up focused on building electric delivery vans and drones for transportation companies, saw its stock surge higher in Tuesday morning trading. As of 1:30 p.m. EDT, Workhorse Group stock is up a healthy 13%.

But on a day in which Workhorse had no news to report -- no earnings, press releases, or even an analyst upgrade -- the question that presents itself to investors is: Why?

A hand drawing a rising red stock arrow, drawn on a yellow background

Image source: Getty Images.

So what

It's all a function of Tesla (TSLA -4.59%)... and Nikola (NKLA -4.66%). Over the past year, shares of the first of these two electric-vehicle makers named after famed electrical inventor Nikola Tesla (Tesla) have more than tripled in value. The other (Nikola), has seen a just-as-impressive surge of 160% over the last three months.

After seeing performance like that out of two "electric-car companies," is it any wonder that investors might be looking around for a third such stock to invest in?

With its stock up 22% over the past year and outperforming the S&P 500, Workhorse Group already shows some evidence of fitting the bill. And while Workhorse is currently unprofitable and has almost no sales to its name, neither is or does Nikola -- and that hasn't stopped its stock from soaring.

Now what

Meanwhile, Workhorse has its eye on a big $6 billion contract that the U.S. Postal Service (USPS) is planning to award later this year. While success isn't assured, the mere potential that Workhorse could win work from the USPS provides the possibility of a catalyst that could send this stock galloping off to the races. 

No wonder some investors are already placing their bets now.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Tesla. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Workhorse Group Inc. Stock Quote
Workhorse Group Inc.
$2.66 (-5.67%) $0.16
Tesla, Inc. Stock Quote
Tesla, Inc.
$275.33 (-4.59%) $-13.26
Nikola Corporation Stock Quote
Nikola Corporation
$3.89 (-4.66%) $0.19

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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