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Workhorse Group Inc. (NASDAQ:WKHS) Plunges Over Stock Dilution Concerns

Workhorse Group Inc. (NASDAQ:WKHS)

Workhorse Group Inc. (NASDAQ:WKHS)

Workhorse Group Inc. (NASDAQ:WKHS) felt the wrath of Wall Street after announcing the pricing of a new public offering for its common stock. Shares of the company shed 20.81% amidst growing investor concerns that the offering will further dilute shareholders.

Public Offering

The offering builds on a $24.6 million offering that the company carried out in the second quarter from which it has so far received $20.5 million.

Thursday’s sell-off pushed the stock near its all-time lows as it continues to trade in a $2.75 – $3.52 trading range. Currently, shares of Workhorse Group Inc. (NASDAQ:WKHS) are trading in a downtrend after coming under selling pressure this year. It faces immediate support at the $2.60 level, below which it could drop to the $1.85 mark – its 52-week low.

Workhorse Group Inc. (NASDAQ:WKHS)
One month WKHS stock price chart

The provider of electric mobility solutions intends to sell 3.75 million shares at a price of $3.20 a share. The company has also granted underwriters warrants for the purchase of additional shares at an exercise price of $3.80 a share.

Workhorse Group Inc. (NASDAQ:WKHS) anticipates a total of $11.2 million from the offering after deduction of underwriting discounts among other expenses. The offering should close on or about September 18, 2017.

Powertrain Power Systems Order

Separately, Workhorse Group Inc. (NASDAQ:WKHS) has tabled a purchase order for TM4 Inc.  SUMO powertrain power systems. The order is for the E-GEN battery and E-100 all-electric delivery truck platforms. The new order builds on a 150 systems order delivered last year and expected to fulfill the company’s near term powertrain requirements.

“TM4’s SUMO powertrain systems have demonstrated excellent performance, efficiency, and reliability in our vehicles on the road,” declared Steve Burns, CEO of Workhorse Group. “Our partnership with TM4, a world-class Tier 1 supplier, along with Panasonic and BMW, enables us to produce a reliable, cost-effective solution for fleets at scale.”

Q2 Earnings

Workhorse Group Inc. (NASDAQ:WKHS) reported a net loss of (-$9.2) million or (-$0.26) cents a share for the second quarter. Revenue in the quarter came in at $270,000 as gross margin shrunk to negative ($0.7) million. Cash and cash equivalent as of the end of the quarter stood at $19.7 million which the company plans to use for working capital and inventory purchases.

During the quarter, the truck and drone manufacturer initiated manufacturing and delivery of 200+ delivery vans. The company also inked a strategic partnership for sales and services with Ryder System Inc.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

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About the author: Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading. Steve keeps his head in the game by looking for, and writing about, small companies that often get overlooked by the big investment firms.

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Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading. Steve keeps his head in the game by looking for, and writing about, small companies that often get overlooked by the big investment firms.

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