Eventually, the USPS (U.S. Postal Service) contract could be worth $6 billion. After remaining weak for months, Workhorse stock has got another major catalyst—a Reddit pump. How high can WKHS stock go based on the Reddit pump?
Since the very beginning, the fortunes in Workhorse stock have been tied to the USPS contract. A lot of the upside was already baked into its stock price on the expectation of the USPS awarding the contract to WKHS. In February, USPS awarded its coveted 10-year contract for delivery vehicles to Oshkosh, which was the only other finalist besides Workhorse. This came as a blow to WKHS stock and it fell by 47 percent in a single day. However, the company has filed a complaint and protested the USPS award.
Workhorse price prediction
Nine Wall Street analysts have been covering the stock. Among the analysts, five have a hold, three have a buy, and one has a sell rating. The analysts’ 12-month average target price for WKHS stock is $20.5, which implies a potential upside of 28.9 percent.
On June 4, Cowen downgraded the stock from “outperform” to “market perform.” As WKHS stock ran up after catching WallStreetBets’ eye, the Cowen analyst felt that the shares fairly priced its upside momentum. He didn't see any other major near-term catalyst that could support the stock.
Workhorse filed a complaint for the USPS contract award.
On June 16, Workhorse formally filed a complaint with the United States Federal Court of Claims protesting the award of the USPS (U.S. Postal Service) contract to Oshkosh, the other competing finalist. It argues that USPS wanted electric trucks, not gas vehicles and Workhorse offered the only bid for an all-electric bid. It also stated that USPS never fully evaluated an Oshkosh electric vehicle.
While Workhorse hopes to win back both the initial award and the 10 years of mail truck orders, it's still uncertain which way the appeal will go. The possibility of Workhorse winning the contract led to an upswing in the stock price.
Workhorse stock’s meme-status and stock surge
Before this catalyst, Workhorse stock had already reached a meme-stock status as it caught the eye of Redditors and other social media users. On June 3, WKHS climbed as much as 59 percent before closing 22 percent higher as Reddit’s popular subgroup, WallStreetBets put its weight behind the stock.
Several Redditors see value in the stock. The high short interest in the stock makes it even more attractive for them. As of June 22, the stock had a short interest of around 24 percent. Lots of WallStreetBets chatter and a high short interest make Workhorse a prime candidate for a short squeeze. GameStop and AMC Entertainment have become famous for their pump by WallStreetBets.
How high can WKHS stock go on the Reddit pump?
After WKHS’s recent run-up, the question now arises, how high can the stock go? It's difficult to say how high a stock can go after the meme crowd takes a fancy to it. After WallStreetBets started pumping AMC Entertainment for the second time in May, any price prediction fell short. There isn't much fundamental basis for the stock surge after retail investors influenced by social media take to buying it. Based on the sizable short interest and the recent appeal by the company for the USPS contract award, the near-term outlook for the stock looks strong.