Workhorse Group Needs to Find a Path to Profitability
WKHS) has seen its share price skyrocket this year. Year-to-date gains for WKHS stock are at an impressive 301.7%. However, it seems that investors’ enthusiasm has worn off with an 8.5% gain this month from a 78% jump in July.” data-reactid=”12″>Electric vehicle manufacturer Workhorse Group (NASDAQ:WKHS) has seen its share price skyrocket this year. Year-to-date gains for WKHS stock are at an impressive 301.7%. However, it seems that investors’ enthusiasm has worn off with an 8.5% gain this month from a 78% jump in July.
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WKHS stock is a vulnerable investment, with an unclear path to profitability, ineffective intellectual properties and weak financials.
the C-Series Workhorse, and is confident of meeting its targets this year. Additionally, its HouseFly delivery drone presents a massive opportunity as businesses embrace the new normal.
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“We are hearing from many businesses that this transition is not a temporary one and that we need to adapt to a new normal,” said Workhorse CEO Duane Hughes.
Despite these prospects, profitability appears to be still way-off.
Worrying Second-Quarter Results
Workhorse Group recently reported lackluster second-quarter results. Loss per share widened to 12 cents per share from 10 cents per share in the prior-year period. However, results were mostly in line with consensus estimates. The company has been unable to surpass EPS estimates more than once in the past four quarters.
from $5,500 to $92,000. Additionally, a significant element of its bottom-line results was an increase of 682% in its interest expenses.
R). Additionally, the company has also reaffirmed delivery targets of producing 300-400 vehicles in 2020.” data-reactid=”39″>Nevertheless, few highlights are pertinent for investors. Workhorse finally started production of its C-series electric step vans as part of its contract with Ryder Systems (NYSE:R). Additionally, the company has also reaffirmed delivery targets of producing 300-400 vehicles in 2020.
raised $70 million in financing. As a result, the company has $105 million in its cash till, which is 338% higher than its 2019 balance.
The problems with Workhorse
60% share of the $500 billion EV market by 2026, making WKHS stock an exciting long-term investment.
1,000 cubic feet of cargo space, an on-board telematics system and a modular battery pack system.
$43 billion by 2024, growing at a CAGR of 20.5%.
With that being said, there a lot of problems for Workhorse, which it needs to address in realizing its potential.
For starters, it’s just not profitable. Net incomes for the past decade are in the negative, with things going from bad to worse with every year. Profitability is marred by significantly high capital expenditures and labor costs. Moreover, debt levels are still considerably high, with a debt-to-equity ratio of 1.74. Having been around since 2007, you’d expect the company to have had developed a path to profitability
Many also criticized the company on the ineffectiveness of its intellectual properties. It currently has eight patents that cover different unique competencies of the company. However, most of them have either limited value or are set to expire soon.
Final Word on WKHS stock
There’s no denying Workhorse Group’s potential, but its just not an investable business at this stage.
Having struggled for profitability for over a decade, it seems to have no clear plan for a turnaround. Though it has an exciting product pipeline, it needs to prove its mettle for investors to have a rethink.
For now, it’s best to avoid WKHS but keep tabs on its performance for the next few months.
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