Workhorse options are affordably priced at the moment
Workhorse Group Inc. (NASDAQ:WKHS) is an exciting player in the electric vehicle (EV) industry, making batter-powered trucks and utility operators. The Cincinnati, OH based firm also develops cloud-based, real-time telematics performance monitoring systems that are fully integrated with their vehicles.
It's been a roller-coaster year for Workhorse stock. After consolidating below $6 for the first six months of the year, WKHS exploded to as high as $22 by early July. A bull flag pattern from there culminated in a Sept. 21 record high of $30.99, while subsequent pullbacks have found support at the shares' 120-day moving average.
Short sellers have been hitting the exits, and a continued exodus could help WKHS return to those September highs. Short interest fell by 34% in the most recent reporting period, yet the 25.81 million shares accounts for a hefty 39.4% of the stock's total available float.
Options are an intriguing route. This is according to the security's Schaeffer's Volatility Index (SVI) of 107%, which sits in the low 2nd percentile of all other annual readings, which means options traders are pricing in relatively low volatility expectations at the moment -- a boon for premium buyers.
Workhorse stock has undoubtedly benefitted from the recent hype around the electric vehicle (EV) industry spearheaded by Elon Musk and Tesla (TSLA). However even as a relatively new company, Workhorse is lacking a lot of the features that investors should be looking for in potential growth stocks. The most worrying detail about Workhorse is that its revenue has declined since 2017. The company went from producing $10.8 million in annual revenue down to just $376,562 over the past 12 months. The company’s net losses also continue to pile up. Workhorse has nearly doubled its net losses since 2016. Furthermore, the company currently has negative equity.
On the flipside, Workhorse is backed by Hitachi. Hitachi is a big Japanese multinational conglomerate. The Japanese company provides financing and service solutions, giving Workhorse more leeway to find a sustainable business model. Nonetheless, the risk in Workhorse will continue to outweigh the reward potential until it begins to show some promising revenue growth.