The market is in the midst of a rotation out of high-flying technology stocks. Electric vehicle (EV) names are no exception. Shares of Workhorse Group (WKHS 8.00%), Nikola (NKLA 3.81%), and Churchill Capital IV (CCIV) are all down as well today, though each has its own story.
As of 1:45 p.m. EST today, Workhorse Group shares were down 6%, while Nikola was down 5.6%. Churchill Capital IV, which plans to bring Lucid Motors public through a merger, was down 2%.
Shares of Workhorse Group continue to suffer after the company lost its bid for a $6 billion U.S. Postal Service (USPS) contract to upgrade the postal truck fleet to next-generation delivery vehicles (NGDVs). The company met with the postal service yesterday, but isn't able to provide details yet. Nikola received an analyst downgrade today, and Churchill Capital IV investors continue to bail after disliking the terms of its deal with Lucid Motors.
Workhorse Group is still hoping to change the outcome of the USPS bid. CEO Duane Hughes said in a statement, "Yesterday's meeting with the USPS marked the first step in what we expect may be a prolonged process to explore our options and possibly pursue further action related to our NGDV bid." The 10-year contract was for up to 165,000 vehicles. For perspective, Workhorse Group plans to manufacture only 1,800 electric vans in 2021. The stock is down almost 60% since the news broke on the contract.
Nikola has had its own troubles, but the company says it is making progress on commissioning its first battery-electric trucks at its Arizona plant. Today, J.P. Morgan (JPM 3.31%) analyst Paul Coster downgraded the stock from a buy rating to hold. The analyst said it was a "tactical move" based on timing, and that he still sees upside for the shares. He has a price target of $30 on the stock, representing almost double the current share price.
Churchill Capital IV shares are still correcting from the speculative run that occurred as rumors of a merger with Lucid Motors swirled. Before the announcement of the merger agreement, there were reports that the deal would value Lucid at up to $15 billion, but the actual equity value of the transaction was only $11.75 billion. After shares shot up to about $60, the terms of the deal brought them back down to what seems to be a more reasonable level. At today's price of $24, Lucid Motors is valued at about $38 billion, based on the deal's terms.
The current rotation out of richly valued or speculative tech stocks is repricing some of those names. The EV sector is a prime target for that correction. Investors should know that these types of stocks come with high volatility, and there may be more to come.