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Watch Out for One NASDAQ- Listed Automobile Stock- Workhorse Group Inc

Aug 17, 2023 | Team Kalkine
Watch Out for One NASDAQ- Listed Automobile Stock- Workhorse Group Inc

Workhorse Group Inc

Workhorse Group, Inc. (NASDAQ: WKHS) is a technology company that provides solutions to the commercial transportation sector. The Company designs and manufactures all-electric delivery trucks and drone systems, including the technology that optimizes the way these vehicles operate.

Recent Financial and Business Updates:

  • Highlights from the Second Quarter of 2023 and Recent Operations:
    • Workhorse effectively accomplished its operational goals in the second quarter:
    • Procured purchase orders for 62 vehicles, including the initial two for the W56 model, and supplied 42 Class 4 (W4 CC/W750) vehicles to clients as part of its dealer network expansion.
    • Conducted various customer demonstrations of electric vehicles, including an extensive full-day field test of the W750 with the City of Los Angeles. Additionally, the W56 was exhibited at CALSTART's electric vehicle event in Washington D.C., showcasing the diversity of Workhorse's last-mile delivery vehicles.
    • Received its maiden commercial drone purchase order for HorseFly™ and concluded preparations for drone assembly at its Mason, Ohio facility.
    • Designated Burr Truck and Trailer Sales as the inaugural certified Workhorse dealer in New York state and the broader Northeast region of the United States.
    • Established EVC/Smyrna Truck as the first accredited Workhorse EV dealer and body builder in Georgia.
    • Expanded the certified Workhorse dealer network by adding Western Truck Exchange, thereby extending the Company's presence to the Los Angeles metropolitan area in California.
    • Dispatched 53 Tropos vehicles that were assembled in Union City so far this year, with anticipated increased volumes in the latter part of 2023.
    • Successfully completed Phase 1 implementation of the Company's ERP system, a move aimed at enhancing operational efficiencies as Workhorse scales up its product production.
  • Financial Results for the Second Quarter:
    • In the second quarter of 2023, gross sales totaled USD 6.4 million, offset by an allowance of USD 2.4 million to account for potential HVIP voucher impact, pending CARB's final decision on Workhorse's HVIP eligibility. Net sales for the same period reached USD 4.0 million, a rise from USD 0.0 million in the corresponding period of the previous year. This increase in sales is primarily attributed to the sales volume of the W4 CC vehicle during the current period.
    • The cost of sales increased from USD 3.0 million to USD 8.4 million when compared to the same period of the previous year. The surge in cost of sales primarily resulted from a USD 4.8 million increase in expenses related to vehicle sales and a USD 0.6 million rise in employee compensation and related costs.
    • Selling, general, and administrative (SG&A) expenses rose from USD 13.0 million to USD 14.0 million when compared to the same period last year. This increase is mainly attributed to a USD 0.5 million hike in employee compensation and related costs, including non-cash stock-based compensation expenses, a USD 0.4 million rise in professional services expenses, and a USD 0.5 million increase in other operational expenses. This increase was partially offset by a USD 0.6 million decrease in legal expenses.
    • Research and development (R&D) expenses remained steady at USD 5.1 million for both the three-month periods ending June 30, 2023, and 2022.
    • Net interest income stood at USD 0.5 million, as opposed to an interest expense of USD 0.1 million during the same period last year. The net interest income for the current year was driven by interest earned on cash held in the Company's money market investment account.
    • For the quarter ending on June 30, 2023, the Company recorded a net loss of USD 23.0 million, a progression from a net loss of USD 21.2 million during the same quarter of the previous year. The loss from operations for the second quarter amounted to USD 23.5 million, compared to USD 21.1 million during the same period last year.
    • As of June 30, 2023, the Company held approximately USD 62.4 million in cash and cash equivalents.

Technical Observation (on the daily chart)

The price of WKHS stock has shown a consistent downward trend since making its 52-week high on August 17, 2022, with a correction of approximately 81.08%. Currently, the stock is near an important support zone of USD 0.70-USD 0.80, from where price has taken support in the past. A break down in downward direction from the range of USD 0.70-USD 0.80, would likely initiate a new short-term trend in the downward direction with targets of USD 0.40- USD 0.50 levels. The RSI (14 period) momentum indicator is in a down trend with currently at a value of 32.83, with expectations of some consolidation or a short-term upward momentum. Moreover, the price is currently positioned below both the 21-day SMA and 50-day SMA trend-following indicators, which may act as dynamic short-term resistance levels.

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As per the above-mentioned price action, key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Watch’ rating has been given Workhorse Group, Inc. (NASDAQ: WKHS) at the current market price of USD 0.78 as of August 17, 2023, at 09:15 am PDT.

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing. 

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

How to Read the Charts?

The Yellow colour line reflects the 21-period simple moving average (SMA) while the blue line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The Orange colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The Red and green colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps in easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices. 

The reference date for all price data, currency, technical indicators, support, and resistance levels is August 17, 2023. The reference data in this report has been partly sourced from REFINITIV. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar 

Note: Trading decisions require a thorough analysis by individual. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.


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