What happened
Workhorse Group (WKHS +0.00%) stock opened at $13.85, dropped to a low of $12.43 during the day and closed at $12.51, a one-day tumble of 9.61% on Wednesday.
Shares in Workhorse, a maker of electric trucks, have been a favorite among retail investors and were as high as $17 last week.
Image source: Getty Images.
So what
There isn't one reason for the tumble, but a number of factors. Workhorse, which lost out to Oshkosh Defense, a division of Oshkosh, on the contract to make the next-generation vehicles for the U.S. Postal Service, has lodged a formal complaint with the Federal Claims Court regarding the bid process.
On top of that, investors may have become wary in what has been a bad week for EV makers. Last week, The Wall Street Journal reported that the U.S. Department of Justice is investigating another EV maker, Lordstown Motors.
The news has sent shockwaves through the EV industry and on Wednesday, two other U.S. EV makers, Tesla and Canoo, also saw their shares plummet.
Then there are Workhorse's financials, which are concerning. On the positive side, the company reported $521,000 in first-quarter sales, compared to $84,000 in Q1 2020. However, the company lost $120.5 million compared to $4.8 million in the same period in 2020.
Now what
Electric vehicles are still a growth industry. President Joe Biden has made it a goal to increase the production of electric vehicles and charging stations in the United States.
In the long run, that bodes well for Workhorse, but the company will likely face a lot of scrutiny in light of the Lordstown investigation.
There's also plenty of mainstream competition on the horizon. Ford just introduced its F-150 Lightning electric truck, and General Motors, in January, launched a new start-up, BrightDrop, that will focus on making electric delivery vehicles.
Losing the bid for the Post Office fleet redesign hurts Workhorse, but there are plenty of reasons for optimism for the stock, even when it's no longer a meme darling, if it can get its financial house in order.
