Electric Truck War

By Hoda Mehr Thu, Jul 2, 2020

Hey Scoopers,

The market got excited about a possible COVID-19 vaccine and then lost the excitement due to the retracting of the reopening orders in states such as California. — More on that in the “Overall Market” section.

Beyond the overall market, the race to dominate the electric truck market is on, and one oldtimer was embraced by investors, while a newcomer lost a bit of its luster. — More on that in the “What’s Up?” and “What’s Down?” sections.

Oh, by the way, the food delivery war is getting heated. — More on that in the “Water Cooler” section.

But, first, here is a recap of what happened in the market yesterday:

Market Recap

• U.S. markets: The indices didn’t agree on the direction on Wednesday. Scroll down to the “Overall Market” section to read more.
• Cryptocurrency: Bitcoin’s price continues hovering slightly higher than $9,000 per coin.

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The Good News Investors Wanted Came And Gone

Investors are always waiting for a reason to jump and buy more stocks, and the good news about the early success of a Coronavirus vaccine by Pfizer (Ticker: PFE) did the job for them. However, the market didn’t end up much higher because of concurrent widespread news about the growing number of COVID-19 positive cases and the death toll and the retracting of the reopening orders in states such as California.

An Oldtimer In The Electric Truck Stock

So, what happened?

Shares of Workhorse Group (Ticker: WKHS) were up more than 18% on Wednesday. Financial analysts are getting extremely bullish about this stock. As an example, analysts from BTIG more than doubled their price target for the stock.

Founded in 2007, the company already has nearly 400 vehicles on the road. The company has a partnership with USPS to manufacture electric delivery vehicles for the United States Postal Service. The company is already delivering its product to customers such as UPS. More interesting is the company’s last-mile delivery vehicles that are equipped with delivery drones. The last-mile delivery market is an $18 billion market opportunity, and Workhorse has a head start. What has caught investors’ attention is the recent partnership with Lordstown Motors, who plans to license and manufacture electric pickup trucks utilizing the Workhorse’s W-15 Technology.

The bothersome aspect of the company’s operations is its balance sheet. It has a high debt-to-equity ratio, and its earnings are not enough to cover its debt obligations. Despite the steady progress and rapid revenue growth the company is making, this is a risky bet for investors who are in love with the electric truck market.

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Out Of Favor Electric Truck Stock, At Least For A Day

So, what happened?

Shares of Nikola (Ticker: NKLA) were down more than 2% on Wednesday. The company has been a newcomer in the electric truck market since it merged with a special purpose company to go public. Like all startups, there was a lot of excitement, and little data to back it up. The stock price drop seems to be in response to the enthusiasm around Workhorse Group (Ticker: WKHS), and nothing has changed operationally about Nikola. There was no real operational data to gauge Nikola’s strength, and there is still none. Both stocks are risky bets on the future of electric trucks, and it depends on which one manages to send stronger signals of credibility and success.

Food Delivery War Is Not Over

So what happened?

UberEats, the food delivery division of Uber (Ticker: UBER), wants to dominate the market. It has been trying to get a grip on the market by acquiring its competitors. It made an effort to buy GrubHub (Ticker: GRUB), and that plan didn’t pan out. Now, the company is after Postmates, another food delivery rival. However, it seems this one also has other plans rather than joining forces with Uber.

The question for Uber’s executives is that why do you focus on low-margin, cut-throat markets that the only way to win is to dominate the market?! Regardless, the food delivery war is nowhere to be over, and things are getting heated.

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About the Author

The authors of this Scoop are the editorial team at Stock Card, led by Hoda Mehr. Hoda Mehr is CEO and Co-founder of Stock Card and the host of Renegade Investors podcast. She runs a community of 40,000 stock market investors and manages Stock Card's successful flagship portfolio, Roll with Our CEO, on Stock Card Portfolio Store. Hoda is an Economist with an MBA from Concordia, John Molson School of Business. She applies behavioral economics, data journalism, and storytelling to all aspects of her work. Before starting Stock Card, Hoda worked as a strategy and insights lead at technology companies including Symantec, Aimia and Sony. Create a free account to do your stock market research easily and mistake-free: Stock Card Stock Card