Please ensure Javascript is enabled for purposes of website accessibility

Why Workhorse Group Stock Jumped 30% Today

By Howard Smith - Mar 8, 2021 at 1:38PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company may have gotten more help over the weekend in its fight for a USPS truck contract.

What happened

Shares of electric van maker Workhorse Group (WKHS -0.72%) shot up 30% early Monday before paring those gains. As of 1:20 p.m. EST, shares were still 14% above Friday's closing price. 

Some news over the weekend gave investors hope that the company's attempt to reverse a U.S. Postal Service (USPS) contract awarded to a competitor might have some congressional support. 

So what

Last week, Workhorse Group said it met with USPS representatives to discuss the contract results and more specifics of the selection process. The contract is for as many as 165,000 new-generation delivery vehicles (NGDVs) over a 10-year period. Over the weekend, Ohio Rep. Tim Ryan called for an investigation into the contract award, according to the American Journal of Transportation. The contract was given to a subsidiary of Wisconsin-based Oshkosh (OSK 1.94%).

red Workhorse Group C-1000 electric delivery van

Workhorse Group C-1000 electric delivery van. Image source: Workhorse Group.

Ryan represents the Ohio district containing electric vehicle maker Lordstown Motors (RIDE -2.35%), in which Workhorse owns a 10% stake. 

Now what

Ryan called the contract process "suspicious" and called for an investigation related to an after-hours purchase of Oshkosh stock worth more than $54 million that occurred the day before the contract announcement. Ryan said he will ask the Securities and Exchange Commission (SEC) to investigate, according to the journal report.

After Workhorse met with the USPS, CEO Duane Hughes said in a statement that it "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."

Workhorse shares dropped 50% upon news that the company didn't even get a piece of the contract, and investors are now bidding it back up thinking there's a chance the outcome could change. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Workhorse Group Inc. Stock Quote
Workhorse Group Inc.
WKHS
$2.76 (-0.72%) $0.02
Oshkosh Corporation Stock Quote
Oshkosh Corporation
OSK
$90.22 (1.94%) $1.72
Lordstown Motors Corp. Stock Quote
Lordstown Motors Corp.
RIDE
$2.08 (-2.35%) $0.05

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
334%
 
S&P 500 Returns
117%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.