EV Stocks Workhorse, Lordstown Motors Ride The Short Squeeze Wave

Heavily-shorted electric vehicle stocks such as Workhorse Group Inc WKHS and Lordstown Motors Corp RIDE surged on Wednesday on a trading day that saw huge gains in retail-investor favorites.

What Happened: Workhorse with a short interest valued at $47.54 million or 41.93% of float topped the list of MarketWatch’s most shorted stocks.

Short interest in Lordstown was valued at $34.24 million or 30.82% of the float. The EV firm was listed among the most shorted names.

Workhorse shares rose 16.23% in the after-hours session on Wednesday to $13.39 after closing nearly 19.6% higher at $11.52 in the regular session.

Lordstown shares closed 19.75% higher to $12.37 in the regular session on Wednesday and declined 1.37% in the after-hours trading to $12.20.

EV stocks were surging in an environment where so-called stonks such as AMC Entertainment Holdings Inc AMC, GameStop Corp GME, and BlackBerry Ltd BB saw spectacular gains on Wednesday amid a retail investor-led frenzy.

Why It Matters: EV stocks have been lackluster this year with segment leader Tesla Inc TSLA down 14.2% since the year began. Workhorse is down 41.8% and Lordstown 38.3% in a similar period.

Workhorse stock has been under pressure after the company lost a lucrative deal to supply vehicles to the United States Postal Service to Oshkosh Corporation OSK in February. 

The Ohio-based company delivered just six trucks in the first quarter as per Workhorse's first-quarter earnings release.

Lordstown has been grappling with its own troubles. Short-seller Hindenburg Research — whose earlier report led to the ouster of Nikola Corp NKLA CEO Trevor Milton  — released research on the company alleging fraud in operations in March.

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“Lordstown is an EV SPAC with no revenue and no sellable product, which we believe has grossly misled investors on both its demand and production capabilities,” Hindenburg said earlier.

Last month, Wolfe Research downgraded Lordstown shares to Sell from Hold and cut the price target to $1 per share from $18.

Lordstown released its Q1 results last month and reported a net loss of $125 million. The company said it expects production of its Endurance pickup in 2021 will “be limited and would at best be 50%” of prior expectations.

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