Latest: WKHS up 35% at time of open on Thursday, June 3.
Why?: Workhorse has started to pick up traction across social media platforms. Retail traders are discussing the short squeeze potential of the stock as short interest sits close to 42%.
After a meteoric rise from $1.15 to $42.96 per share in less than 3 years, WKHS has taken its first major tumble since its IPO in 2018. It lost the $6 billion USPS contract it was vying for, and the manufacturer of eco-friendly electric delivery and utility vehicles fell along with many other tech stocks recently.
Is this a dip worth buying? Take a look at the stock’s history, future prospects and learn how to buy WKHS stock now.
How to Buy Workhorse Group Inc. WKHS Stock
Make sure you know everything you need to know about how to buy stocks before you pick up your first shares of WKHS.
There are 4 basic steps to buy Workhorse Group Inc. stock:
- Pick a brokerage.
When choosing a broker, the most important thing is to be sure it offers stock trading. Some brokers are limited to crypto, forex or other products so you won’t find WKHS on those platforms.
Beyond offering stocks, investors need to compare the kind of plans and accounts each broker offers to figure out which brokerage best fits with your investing style and goals.
- Decide how many shares you want.
After you open your brokerage account, you’re ready to start trading. Decide how many shares of WKHS you want to add to your portfolio.
There are still within the first couple years of any new stock’s IPO, and you can expect more volatility which increases risk. However, newer stocks also have a lot more room to grow than more established companies.
- Choose your order type.
Now that you know the number of shares, the next step is to decide what kind of order you’ll place.
There are 4 main order types. Before you can understand the difference between them, you’ll need to know a few common trading terms:
Bid: The price you’re willing to pay.
Ask: The price a seller is willing to sell for.
Bid-ask spread:This is the difference between your bid and the seller’s ask.
For high liquidity stocks that trade quickly, the spread is usually low. You offer to pay the current market price and the order fills almost instantly.
Low liquidity stock orders can take longer to fill because the price might have changed significantly since you placed your order.
This risk of spread is the reason why different order types exist. Here’s a quick overview of the different types:
Market order: This is a standard, no-restrictions order. You just say how many shares you want and the order fills as soon as the shares are available, regardless of what the price is when that happens. It’s best used for high liquidity stocks where you’re not really worried about the price changing drastically.
Limit order: A limit order allows you to set a maximum price you’ll pay. If you’re willing to buy WKHS while it’s at $14 but you wouldn’t be willing to pay if it rose to $18 before your order filled, put a limit in at $18. If the price of WKHS hits your limit, the order automatically cancels.
Stop-loss order: A stop-loss order puts an automatic sell trigger in place when you buy stock. Let’s say you buy WKHS at $14, but you don’t want to risk losing more than $2 per share if the stock dips. You can place a stop-loss at $12 which will automatically trigger a sell order if the price dips to that point.
Stop-limit order: A stop-limit order has a sell trigger and a cancel trigger. If you don’t want to lose more than $2 per share, you put that $12 stop loss on your order. However, if there’s low trade volume, that would trigger a sell order at $12. The order might not fill until WKHS has bottomed out at $4. If you’d rather not take that massive loss and wait for a better sell opportunity later, you put a stop-limit on your order. This is a 2nd price point that will cancel your sell order. A $12 price will trigger a sell order, but then your stop-limit at $11 will cancel that order. Then you can hold your shares and wait for WKHS to rebound.
- Execute your trade.
With your trade restrictions in place and your number of shares decided, you’re ready to execute your trade.
Once you hit the trade button, your buy order will fill as soon as there are shares available that meet all of your trade restrictions. The fewer restrictions you have, the faster your order can fill.
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Workhorse Group Inc. Stock History
After offering its stock at $1.15 per share in 2018, WKHS enjoyed unusually steady growth over the past 2 years, climbing all the way up to $42.96 by early February 2021. The price didn’t move much during the 1st year, but after Workhorse passed its Federal Motor Vehicle Safety Standards test in summer 2020, production of its fully-electric delivery vans ramped up and so did stock value.
WKHS plummeted to $13.85 per share during February 2020. The sudden decline in Workhorse’s price came with the announcement that the USPS contract it was expecting to win was instead awarded to Oshkosh.
This bad news combined with the broader decline across the tech sector. As hopes for a reopening of the economy grow, investors are steering away from high-growth stocks like those in tech and toward the industries that had been hit hardest by the pandemic.
Pros to Buying Workhorse Group Inc. Stock
In its Q4 earnings report, Workhorse reported net income of $280.5 million, up 427% from the 4th quarter in 2019. The growth stems largely from Lordstown Motors, the electric truck manufacturing startup that Workhorse owns a 10% stake in.
Workhorse also has a licensing agreement with the startup for intellectual property used in Lordstown’s debut electric pickup truck the Endurance.
To those that suggest Workhorse lacks scalability, CEO Duane Hughes says the company is entering the new year stronger than ever. There is more than $200 million cash on the books and 8,000 electric vehicles ready-to-go.
During its earnings call, Workhorse also announced its partnership with Hitachi to expand manufacturing and supply chain capabilities and develop a nationwide dealer network to drive sales of its electric vehicles. With these major expansion plans, scalability certainly doesn’t seem to be an issue.
Cons to Buying Workhorse Group Inc. Stock
The price took its biggest hit following news that Workhorse did not land the $6 billion USPS contract. But it seems Workhorse isn’t accepting the defeat without a fight.
Given the company was the only bidder to offer a fleet of all-electric vehicles, the news that Oshkosh won the contract came as a major shock. The company met with representatives from USPS on March 3 to explore options. Legal action is a possibility.
It’s $652,000 in 4th quarter revenue also fell short of the FactSet estimate of $1.2 million. Between the loss of a major government contract and its sluggish revenue growth, investors worry whether Workhorse will be able to continue investing in its ambitious expansion plans.
In order to scale, it needs more cash flow but in order to increase cash flow, it needs to scale.
Invest in Workhorse Today
With House Democrats vowing to stop the Oshkosh contract, hope is still alive that Workhorse could end up getting at least part of the USPS contract it lost in February. Even without the contract, major plans for expansion in 2021 might be enough to regain the stock’s upward momentum.
The question that investors have to ask is whether it will be able to scale fast enough. For those who believe the answer is yes, this dip is a prime buying opportunity.