Workhorse Has 4 possible outcomes between now and March 31st
This is not Technical Analysis. I have posted TA's on $WKHS in the past but the next moves on this are not determined by fundamentals but by wether or not they are chosen for a $6.3 to 20 billion dollar contract. No lines or triangles can predict the outcome of the USPS decision.
WKHS is one of three (really two) remaining finalists in a contract to replace some or all of the fleet of 165,000 US Postal Service mail delivery vehicles across the country.
The only other real finalist is Oskosh who is teaming up with Ford. These guys submitted an internal combustion engine fossil fuels based vehicle for this contract, and with Biden's new Zero-Emission initiative it is highly unlikely they are selected, although they do have an electric van (not the same as the one they submitted in the contract) on the way for 2022.
Here are the four scenarios that can play out with somewhat estimated odds.
Scenario One: 25% or 1/4 chance: WKHS earns the entire contract. Someone else did the math of the fair stock price after adjusting for the additional billions of dollars WKHS would have from winning the contract and they came out with $172 per share right after the contract is announced. I set the range from $105 to around $199 as the upper maximum you can see in March.
Scenario Two: 40% or 2/5 chance: The contract is split up between Oskosh and WorkHorse. This is the most likely of all scenarios. In the initial documentation before Biden's 100% green energy plans, the USPS wanted 75% electric 25% gas vehicles so it is possible workhorse gets 75% and Oskosh gets 25%. Others on the internet claim that it will be all or nothing but if you check the actual agreement it gives room for a split which the government does all the time. Even with only 10% of the contract awarded to WKHS you can expect to see the stock break past $60 the very next day.
Scenario Three: 15% chance: Oskosh is an awesome company, they have a very positive relationship with the government selling us Humvees for the military. They are respected and reliable, however they submitted a fossil fuel powered prototype and due to contract law can't just resubmit something else at the last minute. Especially with Biden wanting to look like he can get shit done AND after having made a statement about electrifying the US Fleet it looks insanely unlikely that OSK gets the entire bid, but I will still give them a 15% chance because the CEO's are fairly confident in their company winning it. If this happens, the only support that won't get destroyed the very next day is at the $16 level.
Scenario Four: 20% chance: They cant come to a decision and push it back until next quarter. This has happened already two times. They were first supposed to decide this summer, but they pushed it back to December. In December they failed again and pushed it back to latest March 31st. I am hoping that third time is the charm. Keep in mind this is a $6Billion dollar contract, and in the scheme of things, it costs $1 billion or 1/6 of the entire contract just to maintain the current decrepit vehicles. If this happens, the pullback to about $20 is super likely.
I hope you enjoyed this analysis. Yes, the %'s I made up are somewhat arbitrary - don't ask me for sources.
WKHS is one of three (really two) remaining finalists in a contract to replace some or all of the fleet of 165,000 US Postal Service mail delivery vehicles across the country.
The only other real finalist is Oskosh who is teaming up with Ford. These guys submitted an internal combustion engine fossil fuels based vehicle for this contract, and with Biden's new Zero-Emission initiative it is highly unlikely they are selected, although they do have an electric van (not the same as the one they submitted in the contract) on the way for 2022.
Here are the four scenarios that can play out with somewhat estimated odds.
Scenario One: 25% or 1/4 chance: WKHS earns the entire contract. Someone else did the math of the fair stock price after adjusting for the additional billions of dollars WKHS would have from winning the contract and they came out with $172 per share right after the contract is announced. I set the range from $105 to around $199 as the upper maximum you can see in March.
Scenario Two: 40% or 2/5 chance: The contract is split up between Oskosh and WorkHorse. This is the most likely of all scenarios. In the initial documentation before Biden's 100% green energy plans, the USPS wanted 75% electric 25% gas vehicles so it is possible workhorse gets 75% and Oskosh gets 25%. Others on the internet claim that it will be all or nothing but if you check the actual agreement it gives room for a split which the government does all the time. Even with only 10% of the contract awarded to WKHS you can expect to see the stock break past $60 the very next day.
Scenario Three: 15% chance: Oskosh is an awesome company, they have a very positive relationship with the government selling us Humvees for the military. They are respected and reliable, however they submitted a fossil fuel powered prototype and due to contract law can't just resubmit something else at the last minute. Especially with Biden wanting to look like he can get shit done AND after having made a statement about electrifying the US Fleet it looks insanely unlikely that OSK gets the entire bid, but I will still give them a 15% chance because the CEO's are fairly confident in their company winning it. If this happens, the only support that won't get destroyed the very next day is at the $16 level.
Scenario Four: 20% chance: They cant come to a decision and push it back until next quarter. This has happened already two times. They were first supposed to decide this summer, but they pushed it back to December. In December they failed again and pushed it back to latest March 31st. I am hoping that third time is the charm. Keep in mind this is a $6Billion dollar contract, and in the scheme of things, it costs $1 billion or 1/6 of the entire contract just to maintain the current decrepit vehicles. If this happens, the pullback to about $20 is super likely.
I hope you enjoyed this analysis. Yes, the %'s I made up are somewhat arbitrary - don't ask me for sources.
Comment:
Scenario 3 hit. FU*C*K MY LIFE
USPS had a conference call today and confirmed that they will be making the decision by March 31st and will NOT be pushing it back again.
This is HUGE news because that means only scenario 1,2,3 are viable now and Scenario 4 is off the table.