Workhorse Falls on Short-Seller Claim It Misled Investors

The short-seller report alleges Workhorse's postal-truck prototypes were plagued with problems. (Workhorse Group)

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Workhorse Group Inc. shares fell briefly after a short seller published a report accusing the startup electric-vehicle manufacturer of “misleading investors” and alleging it’s unlikely to win a key contract to supply postal trucks.

The report published Oct. 8 by Fuzzy Panda Research — a firm that owns a short position in the company’s stock and may stand to gain from a decline in the share price — alleges Workhorse’s postal-truck prototypes were plagued with problems and exceeded maximum cost guidelines. It also claims a postal driver was injured when a parking brake failed in one of Workhorse’s prototypes.

Workhorse is among the final contenders for a U.S. Postal Service contract for a fleet of next-generation delivery trucks that could be worth as much as $6.3 billion after phasing out some 163,000 postal trucks currently in service.

Workhorse declined to comment on the report. Representatives for USPS were unavailable for immediate comment.

Nikola Corp., another electric-truck startup, was the target of a similar critical report published last month by short seller Hindenburg Research, which triggered a collapse in Nikola’s shares even though the company denied allegations of deception.

Fuzzy Panda’s report cited information from investigators it sent to two Workhorse facilities in September and anonymous sources, including one that it claimed was “intimately familiar” with the postal-contracting processes and Workhorse’s bid.

Workhorse C Series trucks. (Workhorse Group)

Workhorse’s onetime partner, VT Hackney Inc., backed out due to chronic “critical failures and breakdowns” in test vehicles, the short seller report said. It also claims a right-of-first-refusal licensing agreement would make affiliate Lordstown Motors Corp. the primary beneficiary of any postal contract. Workhorse owns a 10% stake in Lordstown Motors and the companies share some intellectual property. Both of the Ohio-based companies were started by Steve Burns, who’s now CEO of Lordstown Motors.

Representatives for VT Hackey, now known as ST Engineering Hackney, were not available for immediate contact.

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