What The Short Seller Said: “Workhorse rolled a USPS prototype truck down a hill accidently after their parking brake failed causing a union driver to be hospitalized after jumping out of the runaway vehicle,” the report said, comparing Workhorse to accusations recently made about fellow EV company Nikola Corporation (NASDAQ:NKLA) by short seller Hindenburg Research.
The report also compares Workhorse founder and current Lordstown Motors CEO Steve Burns to Nikola founder Trevor Milton. “We discover a copycat entrepreneur who mimics topical ideas, misleads investors, and has decades of destroying investor capital. Burns is NOT the next Elon Musk but certainly might be a much more nefarious version of Trevor Milton," Fuzzy Panda Research said.
Benzinga has contacted Workhorse for comment on the short report.
Workhorse's USPS Bid: By the end of the year, the United States Postal Service is expected to announce the winner of its Next Generation Development Vehicle contract worth $6.3 billion. Workhorse is one of three finalists.
“Workhorse does not have the ability, machinery, or engineering talent to fulfill the USPS contract even if they somehow won,” Fuzzy Panda Research said.
VT Hackney, Workhorse's former partner on the USPS bid, is highlighted in the report as having walked away, as its parent company said the “award would not be material.”
VT Hackney exited the deal for a small amount of cash and equity in Workhorse, the short report said.
The short report said Workhorse prototype vehicles have had performance problems, suspensions breaking on railroads, problems with safety belts, door failures and an employee injury, leading VT Hackney to exit the deal.
Lordstown Motor Discussion: If Workhorse secures any part of the USPS bid, Fuzzy Panda Research said Lordstown Motors will be the only beneficiary.
Workhorse has a licensing deal in place with Lordstown Motors. Workhorse owns 10% of Lordstown and will also receive royalties on each Endurance truck sold.
Lordstown Motors is in the process of going public through a SPAC deal with DiamondPeak Holdings Corp (NASDAQ:DPHC).
Other Takeaways From Workhorse Short Seller: The Fuzzy Panda Research report said former partner United Parcel Service (NYSE:UPS) has removed the Workhorse name from all literature. Competing company Arrival is now working on a UPS contract.
The short seller said they visited two Workhorse locations and saw no security, no automation, no assembly lines and no IP protection. The facilities featured only show units or prototypes, and employees said there were no purchase orders being fulfilled, the report said.
WKHS Price Action: Shares of Workhorse were down in premarket trading Thursday as the report was released. The stock was trading down 2.27% at $23.65 at the time of publication.
The stock is up nearly 700% in 2020.
Photo courtesy of Workhorse.