Workhorse (NASDAQ:WKHS) stock closed down by more than 6% today after the electric vehicle (EV) company announced it will hold a stockholder vote for a proposed increase in the number of authorized Workhorse shares. The vote is set for Aug. 28 as part of the company’s upcoming Special Meeting.
What do you need to know about Workhorse lately?
Well, the commercial EV maker’s latest fundraising effort appears to be rooted in a recommendation from independent proxy advisor Institutional Shareholder Services. Workhorse stated:
“We have taken decisive steps to rebuild Workhorse over the last two years, and we are making important progress executing our strategy to stabilize, fix and ultimately grow Workhorse […] We encourage our stockholders to follow ISS’s recommendation and vote FOR the proposal to increase the number of authorized shares of Workhorse common stock.”
Workhorse has said that the upcoming share expansion comes as a method to fund its ever-expanding management team, “revitalized” facilities and advancing EV roadmap.
The proposal will require the majority of all its common stock shareholders in order to pass. As such, Workhorse is encouraging shareholders to vote as early as today, either online, via phone or by mailing in a proxy card.
If the measure is passed, Workhorse’s share count will nearly double to 450 million, from 250 million.
WKHS Stock Slides on Share Expansion, Disappointing Earnings
Despite Workhorse’s posturing, WKHS stock investors are a bit more cynical over the basis for the company’s latest fundraising maneuver. Indeed, the commercial EV maker is seemingly desperate for cash, a point made apparent at yesterday’s dismal earnings call.
The Ohio-based company revealed it has just $62.4 million in cash on its balance sheet. Furthermore, Workhorse reported a net loss of $23.02 million in the quarter ended June 30, wider than expected. This represented a loss per share of 12 cents. The company also announced just under $4 million in revenue, far below consensus estimates of $14.8 million.
As such, the company’s frenzied cash grab has clearly rung sour for many investors. Reasonably so, the share expansion would dilute current shareholders’ ownership in the company dramatically.
Regardless, investors may still opt into the proposal out of fear of an imminent funding crisis, not unlike Nikola (NASDAQ:NKLA) not so long ago.
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On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.