Workhorse Group Inc. (NASDAQ:WKHS), a company specializing in the manufacture of electric vehicles and utility vehicles, announced today the implementation of a 1-for-20 reverse stock split of its issued and outstanding common stock. This corporate action took effect on Monday, aiming to address compliance with Nasdaq's minimum bid price requirement.
The reverse stock split did not alter the authorized number of shares of common stock but adjusted the outstanding shares accordingly. The company also adjusted the terms of its outstanding stock options, warrants, restricted stock, and restricted stock units to reflect the reverse split. However, the number of shares available for issuance under the company's equity incentive plans remains unchanged.
The reverse stock split is part of Workhorse Group's strategy to maintain its listing on the Nasdaq Capital Market. The company has been actively addressing the Nasdaq's minimum bid price requirement and is seeking to ensure continued compliance with other listing standards.
Workhorse Group's management has cautioned that there are no guarantees that the reverse stock split will achieve the desired effect of regaining full compliance with Nasdaq's requirements. The company has acknowledged the potential risks and uncertainties associated with its efforts, including the possibility of not regaining compliance or being delisted, which could have a substantial impact on its ability to raise capital and on its overall financial condition and business operations.
In other recent news, Workhorse Group has been in the spotlight due to a series of significant developments. The electric vehicle manufacturer faced a revenue shortfall in the first quarter of 2024, which prompted Roth MKM to lower its price target for the company's shares. The shortfall was attributed to slower than expected deliveries. Roth MKM also emphasized the importance of minimizing equity dilution and promoting revenue growth for Workhorse.
Additionally, the company secured $139 million in financing through a deal involving senior secured convertible notes and warrants. This move aims to provide liquidity and support the firm's ongoing product development. Workhorse also saw its stockholders approve several key proposals during its 2024 Annual Meeting, including a potential reverse stock split and the issuance of the maximum number of shares of common stock underlying the company's senior secured convertible notes and warrants.
DA Davidson also adjusted its price target for Workhorse following the company's fourth-quarter results of 2023, which indicated progress towards high-volume production. The firm maintained a Neutral rating on the stock, citing the company's cautious approach to disclosing its operational targets and forecasts. All these developments are recent, and investors are keeping a close eye on how they will influence the company's future performance.
InvestingPro Insights
Workhorse Group's decision to implement a reverse stock split is a critical step in its strategy to comply with Nasdaq's listing requirements. In light of this development, recent data from InvestingPro provides a snapshot of the company's financial health and market performance. As of Q1 2024, Workhorse Group has experienced a significant revenue growth of 90.1% year-over-year, indicating potential in its business operations. However, this growth is contrasted by a quarterly revenue decline of 20.91%, reflecting the challenges the company faces in maintaining consistent sales figures.
InvestingPro Tips highlight several points of interest for investors. Analysts have revised their earnings upwards for the upcoming period, which could signal improving prospects for the company. On the other hand, Workhorse Group is quickly burning through cash and has been identified as having weak gross profit margins, which are concerning indicators for its financial stability. Furthermore, with a market capitalization of just 41.18 million USD and a troubling gross profit margin of -217.61%, the company's financial position appears precarious.
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