What happened

Electric vehicle company Workhorse Group (WKHS -26.33%) stock plummeted 30.4% in July, according to data provided by S&P Global Market Intelligence.

Just the previous month, Workhorse shares had gained a stunning 77% after a brief stint as a "meme stock" and the company's move to challenge the U.S. Postal Service's decision to award a $6 billion 10-year truck contract to Oshkosh.

The euphoria didn't last long as July brought in some bad news. To make matters worse, Workhorse's second-quarter earnings report, released this morning, reveals something that's worrying investors even more. The stock's already down 14.6% in August, as of this writing.

So what

Workhorse shares got a big blow right as July kicked off when The Wall Street Journal reported the initiation of a probe on Lordstown Motors (RIDE 11.61%) by the U.S. Department of Justice.

A worried person studying a falling stock price chart on a computer screen.

Image source: Getty Images.

While Lordstown stock unsurprisingly tanked on the news, it dragged Workhorse shares down as well, given the company's 10% stake in Lordstown. Workhorse bought the stake as part of a technology licensing agreement with Lordstown in 2019 with a stipulation to not sell its stake for two years. So in its first quarter, Workhorse booked $136.3 million in a noncash charge against a fall in the market value of its investment in Lordstown even as it generated sales worth only $521,000.

Later in July, Workhorse announced the abrupt departure of its CEO, Duane Hughes, and withdrew its guidance, stating that it wanted to give new CEO Richard Dauch "a sufficient review and diligence period" to "establish a plan to address continuing challenges and opportunities." The only guidance Workhorse gave during the first quarter was an estimated production of 1,000 vehicles in 2021.

Now what

Workhorse's second-quarter numbers have just come in, and the company reported revenue worth only $1.2 million versus consensus estimates of nearly $6.4 million and incurred a net loss of $0.35 per share compared with a loss of $1.76 a share in the year-ago quarter. Analysts expected a net loss of $0.29 a share.

As if decelerating top line growth wasn't enough, Dauch revealed Workhorse will revise the design of its C-1000 vehicles based on customer feedback, which means production will be limited for now. That's not something investors in an upcoming company from the red-hot EV industry want to hear now.