Rising concerns regarding climate change, increasing support from governments and international agencies, and favorable market sentiment are some of the reasons contributing to the electric vehicle (EV) industry boom. While many companies are capitalizing on this trend to pump up their sales numbers, many start-ups are surging purely on investor optimism, leading to an EV bubble. If left unchecked, this speculation could lead to a Dotcom Bubble 2.0…
While Nikola Corporation’s (NKLA) conspicuous market debut and triple-digit gains first brought attention to a potential EV bubble, it did not stop there. Companies such as Workhorse Group Inc. (WKHS – Get Rating) and Electrameccanica Vehicles Corp (SOLO – Get Rating) have rallied in triple-digits over the past year, without adequate sales or earnings to back up the price gains. In fact, both companies have yet to generate profits.
While the EV market boom might make these stocks look appealing based on their perceived growth potential, we believe it is advisable to wait for these companies to launch their products commercially and turn a profit before investing in them.
WKHS produces high performance electric vehicles for commercial and utility transportation across the U.S. . It also designs unmanned aerial vehicles purpose built for interstate package delivery. The company is an original equipment manufacturer of commercial medium-duty trucks.
While WKHS has received multiple purchase orders from different businesses over the last year, it has yet to launch its vehicles in the market. The company has not even unveiled its electric vehicles so far, for which it is currently in the initial manufacturing stages. Moreover, the company has lowered its production guidance of 300- 400 vehicles for the fourth quarter ended December 31, 2020, citing COVID- related supply chain disruptions.
WKHS submitted a “Type Certification” application with the Federal Aviation Administration for its Horsefly Unmanned Aerial System (UAS), on October 28, 2020. However, it still has not received a formal approval from the regulator.
WKHS’ cost of goods sold and selling, general, and administrative (SG&A) expenses increased substantially in the third quarter ended September 30, 2020. Its net loss has…
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