Workhorse Shares Fall After USPS Delays Decision

YOUNGSTOWN, Ohio – Workhorse Group Inc.’s stock fell more than 11% Tuesday after the United States Postal Service failed to announce its decision on a $6.3 billion manufacturing contract for its next generation of delivery vehicles.

“Due to the current COVID-19 pandemic and its impact on Postal Service and supplier operations, an award(s) is currently planned for the production phase by the end of the calendar year,” USPS spokeswoman Kim Frum said Tuesday in an email to The Business Journal.

Roth Capital Partners last week issued a report that a decision could come down as early as Oct. 13 and was optimistic that Cincinnati-based Workhorse would win the entire bid. Workhorse is the single bidder that has proposed an all-electric vehicle to supplant the postal services’ existing fleet.

However, Craig Irwin, one of the authors of the report, downgraded Workhorse’s stock to “Hold” from “Buy” on Tuesday and cut his target price to $27 from $33 a share. Nevertheless, he noted, “Workhorse’s proposal would be a good solution.”

Workhorse shares closed at $23.63 per share on Tuesday, down 11.1% from Monday’s close at $26.58.

The USPS response also leaves open the potential for the agency to award multiple contracts to the competing companies. According to earlier reports, Workhorse, Oshkosh Corp. in Wisconsin, and Karsan Automotive, based in Turkey, are the three finalists for the award. 

The USPS said it could not identify those companies vying for the contract.

Workhorse is a 10% stakeholder in Lordstown Motors Corp., a startup electric vehicle company that is angling to become the contract manufacturer for Workhorse should it land the postal service project.  

In November, Lordstown Motors purchased General Motors’ shuttered 6.2 million-square-foot assembly plant in Lordstown. The new company intends to build its first product, the all-electric Endurance pickup, beginning next summer. 

GM tendered Lordstown Motors a $50 million line of credit to acquire the facility, and added another $25 million in investment. The automaker has an 11% stake in Lordstown Motors.

Roth Capital analysts estimated that the Workhorse contract could inject about $800 million in revenue for Lordstown Motors.

Last week, Lordstown Motors announced it would conclude an agreement slated to take effect at the end of the month that would take the electric-vehicle startup public through a special purpose acquisition company, DiamondPeak Holdings Corp.

Shares of DiamondPeak nudged upward on Tuesday, closing at $25.60 per share compared with Monday’s close at $25.19 per unit.

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