At the most basic level, converting blueprints to production represents a pivotal goal for the burgeoning commercial fleet electric vehicle industry. Theoretically, then, Workhorse (US:WKHS) should have sparked considerable interest following Tuesday’s corporate announcement, which revealed the start of production of its flagship electric cargo van.

As well, Workhorse entered into a partnership with Smyrna Truck to be its first certified EV dealer in Georgia.

Specifically, management announced that it started production of its W750 van at its manufacturing facility in Union City, Indiana. According to Workhorse CEO Rick Dauch, the declared milestones represent critical progress in advancing its product roadmap and executing its strategic growth plans.

“We could not be more excited to see the W750 rolling out of our Union City facility, and we are poised to ramp up production of it in the coming months. In addition, we are thrilled to announce this dealer partnership with Smyrna Truck, expanding on our network for customers,” said Dauch in part.

Unfortunately, WKHS stock fell flat on the announcement, dropping like a stone before meandering about 2% down throughout much of the Tuesday session. By the ringing of the closing bell, WKHS had gained just under 1%.

Perhaps the market just needed a little time to digest the news. Ahead of Wednesday’s regular trading session, WKHS stock is up 6.8% in premarket activity.

Workhorse Demonstrates Fighting Spirit

Only a cursory glance at the price chart for WKHS stock reveals the extraordinary uphill battle that the underlying EV maker faces. Since the beginning of this year, shares stumbled about 51%, a worrying figure. In the past 12 months, WKHS gave up roughly 71% of its equity value.

Inarguably, the devastation and lack of confidence in WKHS stock can be tied to its attempt to secure an extremely lucrative contract with the U.S. Postal Service (USPS) to replace its aging fleet of mail carriers. Prior to the USPS making its announcement, WKHS shares traded (on an average weekly basis) at a price over $40.

Enthusiasm prior to the big reveal soared to incredible heights largely because Workhorse represented the only all-electric solution. Seemingly, its proposal aligned with the broader political and ideological push for net-zero emissions. Sadly for believers in WKHS stock, Workhorse lost the bid to defense contractor Oshkosh (US:OSK).

Angered but ultimately undeterred, Workhorse pressed forward. While the company continued to encounter headwinds – most recently shipping delays impacting its W4 CC electric utility truck – the Smyrna deal revealed substantive technical progress for Workhorse.

“Through the many conversations and demos we’ve had with the Workhorse team, we have been extremely impressed with the standard and quality of its vehicles, including the W4 CC and W750,” said in part Smyrna Truck President and CEO Scott Edens.

Still, investors appear overall unimpressed.

WKHS Stock Remains a Highly Risky Venture

Although Workhorse’s tenacity is admirable, the harsh reality is that WKHS stock ties in with a financially troubled profile. As Fintel’s proprietary fiscal performance indicators note, WKHS stock scores poorly for quality, value and momentum.

True, one could make the case that the company’s revenue for the first quarter of 2023 came out to $1.7 million, thus representing about a 170x increase from the year-ago quarter’s sales tally of approximately $10,000. However, the trailing-12-month (TTM) revenue for Workhorse sits at a very modest $6.7 million.

More tellingly, even though WKHS stock trades hands below a buck, relative to sales, it’s wildly overvalued. Presently, the market prices WKHS at a sales multiple of 19.18. In sharp contrast, the revenue multiple for the auto and truck industry is only 1.32.

Even more worrying, Workhorse consistently posts red ink in the free cash flow (FCF) line. In Q1 2023, the company incurred an FCF loss of $38.15 million, expanding unfavorably from the $34.34 million in the year-ago quarter. On a TTM basis, Workhorse is looking at an FCF loss of slightly over $115 million.

On a fundamental note, the W750 cargo van – while offering a utilitarian profile with a payload capacity of 5,000 pounds – nevertheless only has an approximate range of 150 miles (though the actual figure may vary on various factors). Depending on individual use cases, that range may or may not be enough.

Given that Workhorse has suffered credibility problems in the past, getting enterprise-level customers to bite may be a challenge (for instance due to concerns about corporate viability and the need for technical support). Therefore, only the most adventurous and risk-tolerant investors should target WKHS stock.

This article originally appeared on Fintel

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