Shares of Workhorse Group (NASDAQ:WKHS) were trading down on Wednesday, a day after the electric delivery-van maker said it secured $70 million in new financing. Workhorse's shares had closed 20% higher on Tuesday and are still up over 700% since the beginning of April, but they were down about 15.3% as of 10:30 a.m. EDT on Wednesday.
Workhorse said on Tuesday that an unnamed institutional investor has agreed to purchase $70 million in senior secured convertible notes. The new notes are equivalent in seniority to those issued by Workhorse last December, will pay 4.5% annually, and are convertible into common stock at $19 per share.
CEO Duane Hughes said the added funds will give the company what it needs to get its new C Series package-delivery vans into production, and will bolster its balance sheet as it seeks to establish a revolving line of credit.
Separately, in a new note on Wednesday morning, BTIG analyst Gregory Lewis raised his price target on Workhorse's shares to a Wall Street-high $26 from $10 and reiterated his buy rating on the stock.
So why was the stock down on Wednesday? It's not clear.
Lewis wrote that while Workhorse's stock has gained over 200% since the C Series vans received U.S. government approval last month, that approval has put the company in position to bid for a U.S. Postal Service contract that could be worth $8 billion in revenue.
Auto investors should note that bids for that Postal Service contract are due later this month, Lewis said.