Shares of Workhorse Group (NASDAQ:WKHS) look headed for another day of double-digit gains as the name is gaining interest from the meme-stock crowd. WKHS stock was up nearly 20% in pre-market trading.
As is the case with several other stocks that have attracted attention and money from retail investors, there’s little fundamental reason for this morning’s gain nor yesterday’s 19.6% pop.
However, it is worth noting that the shares have 41.9% short interest on 113.38 million float and 123.26 million shares outstanding.
Continuing this week’s meme stock trends, chatter on Redditt’s r/WallStreetBets subreddit has been active today, including with the most talked-about stocks on the forum, BlackBerry (NYSE:BB) and AMC Entertainment (NYSE:AMC), which are up 15% and 6%, respectively. Investors nearly doubled the price of AMC stock yesterday, to $62.55 a share, with more than six times the average daily volume traded.
Bad News Likely Already Priced Into WKHS Stock
The electric-powered delivery vehicle maker said it only delivered six C-series vans when it reported first-quarter 2021 results last month. Revenue rose to about $521,000 in the period, from about $84,300 a year ago. That fell way short of analysts who had expected revenue of $2.3 million. The company’s Q1 loss widened to $16.5 million from $9.1 million a year ago. Analysts on average were looking for a $19.8 million loss.
Workhorse took a $136.6 million hit due to the company’s ill-timed investment in Lordstown Motors (NASDAQ:RIDE). Due to the chip shortage and possibly other factors, Workhorse has reduced its 2021 vehicle production target from 1,800 units to 1,000 units.
It’s possible that investors may have decided that WKHS stock has been punished enough for all that bad news. The share price careened down 80% from its year-to-date high of $42.96 per share on Feb. 5 through May 14. Since then, they’ve regained some 54% of their value.
InvestorPlace contributor David Moadel mentioned last week that perhaps the disappointment is already priced into WKHS stock. “Perhaps contrarian investors can lean into the peak pessimism, in hopes of an imminent turnaround,” he wrote.
On the date of publication, Robert Lakin did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
InvestorPlace contributor Robert Lakin is a veteran financial writer and editor, including previous stints with Bloomberg News and as a buyside equity research editor. His Substack newsletter, TLV Strategist, covers the Israel business scene.
View more information: https://investorplace.com/2021/06/wkhs-stock-how-high-can-the-r-wallstreetbets-frenzy-take-workhorse/