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Workhorse vs. Lightning eMotors: Which Electric Vehicle Stock Is a Better Buy?

Electric Vehicle (EV) stocks ,such as Workhorse (WKHS) and Lightning Motors (ZEV), are trading significantly below their all-time highs. While their stocks might seem attractive to contrarian investors, some stocks remain high-risk bets given steep valuations and uncertainties surrounding their order books.

Most investors looking to gain exposure to the electric vehicle space will know about the usual suspects such as Tesla (TSLA) and NIO (NIO). However any rapidly expanding market will attract a slew of other players that are poised to grow at an enviable pace.

The shift towards clean energy solutions, including electric vehicles EVs, are forecast to gain pace in the upcoming decade making it attractive to long-term investors looking to beat the broader market. Companies are expected to pump in billions of dollars to build an industry that will be supported by governments all around the world.

Keeping these factors in mind, let’s take a look at two relatively newer players in Workhorse (WKHS) and Lightning eMotors (ZEV) to see which is a better stock right now.

Workhorse Group.

A company valued at a market cap of $1.11 billion, Workhouse Group stock is down 78% from all-time highs. Workhorse manufactures and sells battery-powered electric vehicles and aircraft in the United States. Further, it also provides a cloud-based telematic performance monitoring system which enables fleet operators to optimize energy as well as route efficiency.

The company manufactures medium-duty delivery trucks and reported revenue of $1.39 million in 2020. In the second quarter of 2021, Workhorse’s sales stood at $1.2 million while it lost $43.6 million or $0.35 a share in the quarter when it delivered 14 electric delivery vans.

Analysts expected the company’s sales to touch $6.4 million while loss per share was estimated at $0.29 in the June quarter.

Workhorse had claimed the order book for its C-Series vans were robust and stood at 8,000. But the larger model can only carry around 6,000 pounds which will not attract enterprise orders. So, the company disclosed it’s revamping the product design of the vehicle resulting in limited orders going forward.

Workhorse recently appointed a new CEO – Rick Dauch who has extensive experience in the automobile sector, previously helming Delphi Technologies. Dauch is optimistic about the future prospects of Workhorse Group and explained, “I joined Workhorse because of their leadership position in last mile delivery technologies, the nearly 8,000 diverse customer order backlog confirmed with standard vehicle purchase agreements that include typical terms and conditions, eight million miles of road-tested delivery trucks operating in the field and the opportunity to be a market leader in our space.”

We can see Workhorse sales will remain tepid and much lower than the $14.66 million forecast by Wall Street this year.

Lightning eMotors

A company valued at a market cap of $680 million, Lightning eMotors stock is down almost 50% from record highs. This company sells EV-based passenger vans, ambulances, shuttle buses, last-mile delivery vans, box trucks and motor coaches.

In the second quarter of 2021, Lightning eMotors reported revenue of $5.9 million and a loss of $0.79 per share. Wall Street forecasts revenue at $5.37 million and a loss of $0.14 per share in the quarter ended in June.

Lightning Motors said that production in Q2 was constrained due to supply chain issues which impact near-term demand. The company also forecast revenue in Q3 will be similar to Q2 as no orders have been canceled.

The verdict

While both the stocks carry significant risks due to the lack of revenue and earnings visibility, Lightning eMotors seems a better bet, given its lower valuation and revenue forecasts. Analysts expect Lightning eMotors sales to touch $26.75 million in 2021 and grow to $205 million in 2022. Comparatively, Workhorse sales are forecast to reach $112 million in 2022.

WKHS shares were trading at $9.18 per share on Tuesday afternoon, up $0.18 (+2.00%). Year-to-date, WKHS has declined -53.59%, versus a 21.64% rise in the benchmark S&P 500 index during the same period.

About the Author: Aditya Raghunath

Aditya Raghunath is a financial journalist who writes about business, public equities, and personal finance. His work has been published on several digital platforms in the U.S. and Canada, including The Motley Fool, Finscreener, and Market Realist.


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