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Why Workhorse Group Stock Plunged 22% in December

By Travis Hoium - Jan 8, 2021 at 1:19PM

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A big contract could be in question for Workhorse Group.

What happened 

Shares of electric-vehicle (EV) upstart Workhorse Group ( WKHS -6.45% ) fell 22% in December, according to data provided by S&P Global Market Intelligence, as some of the wind came out of the company's sails. 

So what 

The biggest news of the month was that the U.S. Postal Service is delaying a decision on who will get a contract to build next-generation trucks for its fleet. The contract could be worth $6 billion and Workhorse was seen as a frontrunner, so this could be a big blow to the company.

Fleet of plugged-in electric vehicles in a row.

Image source: Getty Images.

To be clear, a decision has not been made about the contract; what was announced was simply a delay. An announcement is expected by the end of March, according to a USPS spokesperson. 

Now what 

I don't think a delay in the USPS contract fundamentally changes the future for Workhorse, but it puts more risk in the company's operations. Investors were betting it can be a growth stock in the industrial EV space, serving big customers like the USPS. That bullish thesis could still come to fruition, but Workhorse has a lot of work to do, and investors are still taking on risk given that the company has yet to reach large-scale production yet.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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