What happened
Shares of Workhorse Group (WKHS 5.84%) 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.
So what
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.
Workhorse will only build a few hundred of its new C Series electric-delivery vans this year, but it's hoping to ramp-up production substantially in 2021. Image source: Workhorse Group.
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.
Now what
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.
