Schrader said any company that wants to launch a true drone delivery service that would rival a truck would need FAA certifications. Workhorse recently ran a demonstration of its autonomous touchless delivery in Virginia. Watch to the full interview with Steve Schrader in the clip below, or listen to the podcast hereĬOVID-19 Impact: Schrader said the COVID-19 outbreak has significantly increased interest in touchless and drone delivery. Obviously, if we were to get the full award or a decent-sized award, that would be transforming for the company,” Schrader said. “I think it’s a great opportunity for us. As more car manufacturers like General Motors ( GM), Honda ( HMC), Volkswagen ( OTCPK:VLKAF), and others are entering the EV field and are preparing for an all-electric future, it's hard to imagine how Workhorse without the USPS contract and with $123 million in debt and no growth prospects will be able to stay afloat.In addition, he said Workhorse vehicles have half the maintenance costs of the current USPS fleet. If that's going to be the case, then Workhorse without the USPS contract will have a hard time gaining any market share. Just recently, Ford has unveiled its new all-electric EV van E-Transit and the company has close ties with USPS, which still uses some versions of its vans across the country. Despite this, there's a risk that Ford ( F) along with Oshkosh ( OSK) decides to revise its final bid for the prototype and make an all-electric vehicle for USPS. Since Workhorse is the only EV manufacturer among the three final contenders, it still has a chance to get some portion of the contract. However, on the other hand, it makes sense for USPS to order an electric version of its vans due to the fact that the whole world is going carbon neutral and the US is about to rejoin the Paris Climate Accord next year. In addition, we should also not forget that USPS is a heavily regulated governmental enterprise, which is unlikely to give a 165,000 order for new vans to a small company that is unable to produce even a couple of thousands of vans in a year. With limited capabilities, lack of pricing advantages, and constant supply chain issues, Workhorse is unlikely to win the whole USPS contract.įor that reason, if Workhorse somehow wins some portion of the USPS contract, it will most likely outsource its production to Lordstown ( RIDE) and others, which in the end will negatively impact its overall margins that are already in the negative territory. In addition, after the company said that it will be unable to meet its production guidance for 300 to 400 C-Series vehicles for this year, it's safe to assume that that thesis appears to be true. In October, Fuzzy Panda Research reported that Workhorse doesn't have enough capabilities to deliver the USPS order if it manages to win the contract. The major problem of Workhorse at this stage is its lack of manufacturing capabilities. For 2021, the Street estimates that the company will make less than $150 million in revenues, which clearly shows that it's hard to justify its current valuation. Despite such a poor performance, Workhorse currently trades at a market cap of more than $2.5 billion simply due to the fact that the USPS contract is still in play. At the same time, the company had a net loss of $84.1 million. The latest earnings report showed that Workhorse had $565,000 in revenues in Q3, way below analysts' estimates by $1.25 million. Workhorse is currently full of debt and it's unlikely that it will receive any portion of the USPS contract at all this year. The company has been in business for more than two decades already, and it has failed to achieve anything meaningful to this day. Other than that, nothing is interesting about Workhorse. In addition, the company is currently in the final stage of bidding for the $8.1 billion contract to manufacture its vans for the USPS, and that's the main reason why its stock skyrocketed in recent months. Workhorse is known for its C-Series electric vans, which the company produces for various enterprises across the US. For that reason, we have no position in the company. With a market cap of over $2.5 billion and a projected 2021 revenue of only $138 million, we continue to believe that Workhorse is a gambling stock that will continue to aggressively move in both directions, but will be unable to create shareholder value in the long term. By lacking the capabilities to manufacture large orders and having a history of under-delivering, it's unlikely that Workhorse will receive the full $8.1 billion USPS contract to manufacture EVs for the postal service. It's still hard to justify Workhorse's ( NASDAQ: WKHS) current valuation, even if we take the possible USPS contract into account.
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