The USPS contract would have been a huge win for Workhorse.
By Paul Ratje/AFP via Getty Images
The U.S. Postal Service said it has awarded the contract to replace its white, right-hand drive, delivery vehicles to Oshkosh, a diversified seller of military and commercial vehicles. The electric-vehicle maker Workhorse bid, but it didn’t win.
Now Workhouse shares are plunging.
The award is for 165,000 vehicles to be delivered over coming years. It’s a significant chunk of business.
Workhorse (ticker: WKHS) stock dropped about 47% in Tuesday trading. Stock in Oshkosh (OSK), the winner, finished up 6.1%. The S&P 500, for comparison, gained 0.1%.
The moves add a few hundred million dollars to Oshkosh’s market capitalization and wiped out more than $1 billion in Workhorse’s. The numbers don’t match exactly, but that isn’t a big surprise. Oshkosh is a larger company with more sources of revenue. Its market capitalization is about $7.5 billion, and it has annual sales of close to $8 billion.
Workhorse didn’t generate significant sales in 2020. It is trying to break into the growing market for electric commercial vehicles. The USPS news is a setback.
Workhorse was the only all-electric offering among the finalists. The stock ran up after President Joe Biden talked about making the federal fleet all electric early in January.
The USPS referred Barron’s to the current press release. It says the Oshkosh vehicles will have both gas and electric powertrains, but the number and timing of electrified mail-delivery vans isn’t known just yet.
The next focus for investors will be on what analysts have to say about the news. Before the announcement, about 57% of analysts covering Workhorse stock rated the shares at Buy, in line with the average Buy-rating ratio for stocks in the Dow Jones Industrial Average. Roth Capital analyst Craig Irwin downgraded Workhorse stock after the USPS delayed the contract-award decision a couple of times.
Barron’s wrote positively about Workhorse stock back in July, partly because of the USPS opportunity. Shares were about $15 when we made that call. They rose as high as nearly $43, but now are right back where they were.
After talking with Irwin, we recommended selling a little as the stock surged early in the year. That turned out to be a good idea, but Tuesday’s USPS decision still took Barron’s by surprise.
Write to Al Root at [email protected]
