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Why Shares of Workhorse Group and Tortoise Acquisition Popped on Monday

By Eric Volkman – Jun 29, 2020 at 5:47PM

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The two companies associated with electric vehicles were supercharged by good news.

What happened

One of the hottest segments on the stock market now is electric vehicles (EVs). This week got off to a roaring start for two stock connected to them -- Workhorse Group (WKHS 7.09%) and Tortoise Acquisition (SHLL), which accelerated almost 47% and 30% higher, respectively, on Monday.

So what

Workhorse, which specializes in electric delivery vans and drones, got a big shot of legitimacy on Monday when it was added to the Russell 3000 Index. Although being included on a storied equities index doesn't change the nature of a company's business, it confers legitimacy and makes a stock a candidate for some of the many index funds popular with investors these days.

A Workhorse EV.

Image source: Workhorse Group.

Tortoise Acquisition isn't technically an EV manufacturer... or a manufacturer of any kind. Rather, it's a special purpose acquisition company (SPAC) formed to acquire and absorb another business. Tortoise's target is Hyliion, a company that specializes in powertrains for electric and hybrid-electric heavy trucks.

Tortoise had no news of its own to report, but the optimism that greeted Workhorse's Russell 3000 news is spilling over. EVs are a growing part of the transportation landscape, and both companies are busy carving out their niches.

Now what

A white-hot sector always cools down. The excitement over EVs will subside, despite the big potential the segment holds for the future. Investors will expect growth and -- at some point -- profitability, and just now the EV industry is too young and capital-intensive to achieve either consistently.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Workhorse Group Inc. Stock Quote
Workhorse Group Inc.
$2.87 (7.09%) $0.19
Tortoise Acquisition Corp. Stock Quote
Tortoise Acquisition Corp.

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