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Workhorse Shares Shrug Off Short-Seller Report’s Allegations

Chester Dawson and Esha Dey
·2 mins read

(Bloomberg) -- Workhorse Group Inc. recovered from an early dip after a short seller published a report accusing the startup electric-vehicle manufacturer of “misleading investors” and alleging it’s unlikely to win a key contract to supply postal trucks.

The report published Thursday by Fuzzy Panda Research -- a firm that owns a short position in the company’s stock and may stand to gain from a decline in the share price -- alleges Workhorse’s postal-truck prototypes were plagued with problems and exceeded maximum cost guidelines. It also claims a postal driver was injured when a parking brake failed in one of Workhorse’s prototypes.

Workhorse is among the final contenders for a U.S. Postal Service contract for a fleet of next-generation delivery trucks that could be worth as much as $6.3 billion after some 163,000 postal trucks currently in service are phased out.

Workhorse declined to comment on the report. A USPS spokeswoman said it could not comment on the contract or bidding process.

Shares of Workhorse declined 1.2% to $23.91 at 1:08 p.m. in New York after paring an earlier decline of as much as 6.1%. The stock had declined as much as 9% in premarket trading.

Nikola Corp., another electric-truck startup, was the target of a similar critical report published last month by short seller Hindenburg Research. That report triggered a collapse in Nikola’s shares even though the company denied allegations of deception.

Fuzzy Panda’s report cited information from investigators it sent to two Workhorse facilities in September and anonymous sources, including one that it claimed was “intimately familiar” with the postal-contracting processes and Workhorse’s bid.

Workhorse’s onetime partner, VT Hackney Inc., backed out due to chronic “critical failures and breakdowns” in test vehicles, the short-seller report said. It also claims a right-of-first-refusal licensing agreement would make affiliate Lordstown Motors Corp., in which Workhorse owns a 10% stake, the primary beneficiary of any postal contract.

Representatives for VT Hackey, now known as ST Engineering Hackney, weren’t available for immediate contact.

The report alleges a separate Workhorse contract with United Parcel Service Inc. for as many as 950 trucks is non-binding and unlikely to be fulfilled.

(Updates shares and adds USPS response. An earlier version of this story was corrected to show a Workhorse stake in Lordstown Motors)

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