One of the most popular electric vehicle companies workhorse, is taking quite a bit of a hit after some recent updates, it's more than fair to wonder if you should be buying the dip, cutting your losses or simply forgetting about the stock. What's going on everyone, i hope you're having a great day, my name is matt and in this video i will be breaking down the recent news related to workhorse and be covering what you should be looking for next, so you can make more informed training and investing Decisions make sure you stick around until the end, because i will be discussing one potential alternative if you enjoy this type of content. Join the party by hitting the subscribe button, don't forget to turn on your notifications, so you don't miss any of the new videos. Alrighty then, now that we got that out of the way, let's dive into it, so why is workhorse dropping? The answer is actually pretty simple shares of the electric vehicle maker workhorse dropped.

After releasing its second quarter earnings, the company reported a revenue of 92 thousand dollars, which was short of analyst estimates of two hundred. Seventy thousand. The net loss was one hundred and thirty one point three million dollars, so, to put it simply, workhorse is taking a hit because the company missed on revenues by quite a bit. I personally don't find this that bothersome, because workhorse is a speculative company.

An investment into workhorse should be thought of as an investment into its potential. Not its current numbers also keep in mind some positive things did come out of their earnings report. A chief executive stated in the first half of the year, workhorse accomplished a series of major operational and ev industry milestones, culminating in the first official deliveries of our c-series trucks to rider on top of that, workhorse received an initial purchase order for 20 c-1000 trucks from E-Trucks in july, and also delivered two c-1000 electric step vans to rider system to help calm, the nerves of investors and analysts, workhorse also affirmed its production and delivery target of between 300 and 400 vehicles in 2020. Here you can see a graphical representation of the revenues.

Miss 275 versus 92.. This graph shows us that the current operating expenses of workhorse are lower than q1 of 2020, but are higher than q2 of 2019. The company's cash and cash equivalent is going up and it's currently sitting around 26.2 million dollars. On more of a bearish note.

Here we can see the net income this recent quarter. Loss of 131 million dollars is clearly overshadowing the small gain from q1 in 2020 and is much larger relative to the loss in q2 of 2019. Beyond the less than pristine revenue and net income of workhorse, the company did announce some noteworthy highlights. Workhorse's strategic partner, lordstown motors, entered into a business combination agreement with diamond peak holdings.

This will result in lordstown motors becoming a publicly listed company on the nasdaq under the ticker symbol ride. I did fully review this announcement in a previous video which you can find in the description below, but the key takeaways are that workhorse will retain a 10 ownership. Stake in the merge company, which is estimated at approximately million dollars, based on a 1.6 billion dollar evaluation, there are also certain royalty considerations. That was the big news in august, but july was also a busy month for workhorse.

They obtained hvib eligibility from california qualifying certain workhorse c series models for monetary vouchers of up to fifty thousand dollars per vehicle. This is exciting news for the average consumer because it makes workhorses vehicles more affordable. We already discussed the order from e-trucks. Workhorse was able to close a round of financing which amounted to 70 million dollars.

We also already discussed the delivery of two-step vans to rider system, but we didn't talk about this. C-Series vehicles were designated as zero emission in the state of california and permitted vehicle sales. In all 50 states, combined with it, passing the federal motor vehicle safety standards in june workhorse is the only american all-electric oem designing and manufacturing last mile delivery vehicles to successfully complete this level of testing with both entities. Satisfying these federal standards is obviously positive news, and it's also good that workhorse was added to the russell 3000 index.

It's pretty common for a stock to have a bullish bump whenever it's inducted into a new index. Before we talk about the extremely coveted usps contract, i do want to discuss. One thing: if you recall the net income was an abnormal loss of 131 million dollars. If you dive into the company's financials you'll realize that a large percentage of the net income loss was from an interest expense.

The company noted that the significant increase was almost exclusively due to the change in the fair value of our convertible note and mark to market adjustment for some non-dilutive warrants issued to a lender. Basically, what they're saying is that the loss in this quarter was an overstatement and it's primarily attributed to non-cash adjustments. I would recommend keeping an eye on this in the future. Just so it doesn't get out of hand, but i wouldn't let it worry you just yet.

As i said before, workhorse is a speculative company and a lot of its short and medium term. Success will be based on the usps contract. There were four companies in consideration, but now there's only three mahindra officially withdrew its bid. Personally, i don't think they really had a shot at being awarded this contract.

So it's not that surprising, but nevertheless it is positive news for workhorse. The usps contract is expected to be announced in august or september, so it's exciting for workhorse and its shareholders. That has made it to the final three. If it does manage to win the contract, you can be rest assured that there will be a massive amount of bullish sentiment.

However, if you're interested in investing in the ev sector, but don't feel like messing around with the binary event, i would recommend checking out ark q. This fund is offered by arkhanvest and it's branded as their autonomous technology and robotics etf. Investing in it would give you exposure to autonomous vehicles, energy storage, robotics and automation, 3d, printing and space exploration. Its ticker is arkq and its expense ratio is 0.75.

This means that for every 1, 000 invested you would pay a small fee of 7.50. Here are the top 38 stocks being tracked by this particular etf? I'm sure you recognize the names of tesla, google, caterpillar, apple, amazon, nvidia and, of course, workhorse. I do find it reassuring that industry experts are continuing to buy more and more shares of workhorse. To give you a better idea of workhorses support and resistance in the near term, let's check out the daily chart.

The ticker for workhorse is wkhs and, as you can see, the earnings announcement prompted a decline of 7.6. I know this might seem like a brutal decline, but keep in mind since the start of this year alone. Workhorse is up an amazing 400 percent. As of today's close, the first support i would personally be watching would come at 13.36.

If the bulls can't hold this line, i would then be looking for a gap fill at 10 and 30 cents if you're bullish on this company. These would both be great areas to buy shares at. On the flip side, i would personally be looking to take some of my profits off the table at the proven resistance of 18. If the bears can't hold this line, i would then be looking for 19.68 and finally, if we get above that, i would be looking for the all-time high just below 23., even though workhorse does have potential for high reward.

Don't forget that there is considerable risk for those of you interested. This is the daily chart for the etf i mentioned earlier arkq since the start of this year. This etf is up a respectable 40, since it's tracking an entire basket of stocks, it does have less inherent risk than a single stock, such as workhorse, but as you'll quickly learn in the stock market. Less risk is commonly correlated with less reward.

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