Send me real-time posts from this site at my email
Motley Fool

Why Workhorse Group Stock Surged 65% Higher in November

What happened

Shares of electric-vehicle company Workhorse Group (NASDAQ: WKHS) were up 65% in November, according to data provided by S&P Global Market Intelligence. While the company had plenty of news during the month, nothing was a clear catalyst to send the stock to these heights. Rather, electric-vehicle stocks were higher in general during November.

So what

Early in November, the U.S. held a presidential election, changing executive leadership for the country. President-elect Joe Biden's policies are viewed as more electric-vehicle friendly than those of President Trump, sending stocks like Workhorse higher. For example, the S&P Kensho Electric Vehicles Index tracks stocks in this industry, and it was up 43% in November. Its gains almost perfectly mirrored those of Workhorse early in the month.

Image source: Getty Images.

Then, on Nov. 16, news broke that Tesla was being added to the S&P 500, causing Tesla stock to surge the following day. But Tesla lifted other electric-vehicle stocks as well, including that of Workhorse. From there, the stock continued to track higher through the end of November.

In summary, Workhorse stock went up because of investor enthusiasm for electric-vehicle stocks in general. I don't believe it had much to do with its business results.

Now what

Long term, Workhorse's business results are going to be what matter. The company had set a goal of 300 to 400 vehicles by the end of this year. But in November, management said it's going to be unable to meet this goal. And since the start of December, Workhorse stock has been falling because the United States Postal Service (USPS) is delaying new vehicle purchases. Workhorse previously developed a prototype vehicle for the USPS, and investors hope it snags a large portion of the $6 billion contract up for grabs.

That said, Workhorse has received real vehicle orders, which makes this growth stock better than some electric-vehicle start-ups. Management believes it can produce 1,800 vehicles next year. For now, I suggest investors focus on the company's ability to improve its supply chain to meet this target.

10 stocks we like better than Workhorse Group
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Workhorse Group wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of November 20, 2020

Jon Quast has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Tesla. The Motley Fool has a disclosure policy.


Popular posts

Welcome! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue