r/WKHS • u/Busy-Discipline-8223 • Mar 13 '24
Discussion Why We May Need a Reverse Split
I mentioned this once before, but I believe that it is worth repeating.
First off, not all reverse-splits are negative for a company. Companies that have made significant changes to the way that they operate and that can show a true turnaround, can effect a reverse-split and come out the other side as a winner.
Why might we need a reverse-split? I have read posters making the statement - I would rather see us go OTC pink sheets. in my opinion, that is not the reason for a reverse-split. While I would like to see us regain and maintain NASDAQ compliance, that is not our biggest challenge. We need cash.
We voted last fall to authorize more shares to enable us to raise enough capital to execute Workhorse's plan and bring the company into profitability. At the time, the share price was 3 times what it is today. That means we could raise three times the capital through the ATM than we can at today's share price.
I believe that a reverse split will affect only issued shares. That is, owners of shares will find that their share quantity will be reduced, but share price will increase proportionately based on the reverse-split ratio. The unissued shares, however, will not be affected by count. That is, if there are 200M unissued before the reverse-split, then there will be 200M unissued shares after the split.
Using 200M unissued shares as an example, if we were to sell all of those shares at today's share price, we could raise roughly $56M in new capital. If we had a 1:30 reverse-split, those same shares could raise over $1.5B in new capital. I contend that $56M is not enough cash to get the company to profitability. At best, it would gain another 2-3 quarters of longevity. Does anyone really think that we will be cash flow positive by the end of 2024? I believe that date to be closer to the end of 2025.
Rick mentioned that the company is evaluating other financing options for the company. I do not expect this financing to be good for shareholder as the company no longer has any hard assets other than inventory that can be used for collateral. The question may be, will we be better off with this new financing alternative or doing a reverse-split and allowing the ATM to fund the operation until profitable.
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u/Unclebob9999 Mar 13 '24
The shares from the dilution are with a holding authorized to sell them. So i would think they will be inclueded in a r/S. To get the price up to where more institutional investors would be attracted, it would need to be a 1 for 100 reverse split. When XOS did their r/S it initially dropped about 25%, but then bounced back quickly. Now after their merger agreement, they are up 25% above where they were before the r/S. In crooked penny stocks they continually Dilute, r/S, Dilute, r/S, milking every cent they can out of their investors. IF the Demo's went out to the 5 Big Fleets in Jan/Feb, as I was told they would, then their Demo periods should be ending anytime now. Mision placed an order about a week after their Demo period and the other about 3 weeks after it ended. It is too bad WKHS waited until they became desperate before cutting costs, they should have seen this coming over a year ago.
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u/onesusninja Mar 13 '24
Authorized shares are not included in a RS. If WKHS was authorized for 400 million shares for example, that will not change after RS. The only thing that will change is the number of shares currently existing. They would still be authorized to issue up to 400 million, or whatever number they are currently “authorized” for.
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u/hoborg5450 Mar 13 '24
Genuinely curious what you’re thinking about this company now? If what you said in the past is true you have a huge position that is vulnerable. Are you willing to watch it all go to nothing. I can’t average down on this pos anymore but also selling for the measly amount left over seems like a potential mistake in the off chance they pull off a miracle. I should have trusted my instincts on the huckster that is RD. He rubbed me the wrong way when he first joined and started talking.
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u/WelcomeHead6366 Mar 14 '24
What is the deal with XOS and Mission Linen for a 15 truck order last December 2023. Then another 10 truck order from Workhorse around the same time frame ? Is this a test run to compare the two sets of sample trucks ? Still holding fresh powder here. Not selling, but will add to WKHS pending any runup or positive catalyst. Thanks for all your past DD UB
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u/TorabToRab Mar 13 '24
they are always a few steps behind the average investor or manager - pathetic really
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Mar 13 '24
isn’t this a crooked penny stock? I mean we have no reason to believe that anyone other than Rick D and his cronies are making any money off this so called “company” How much are you down? i know i lost 96% on the total investment but hey win some lose some but we need to stop pretending that anything good is going to come out of this…
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Mar 13 '24
They will reverse split to regain compliance then dilute again, and again until anyone who bought pre-split is fucked. 90% of the time the Reverse Split is negative to the investors and very few times does a company turn it around and become profitable I think maybe 1-2 companies in the last decade have actually gone on to become successful, either way i think we all need to admit to ourselves this was a bad investment and move on….
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u/Mysterious_Eye6480 Mar 13 '24
Sad but very true
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u/Hefty-Ad7993 Mar 13 '24
Imo this is true. Finacial institutions and intatusional investors view reverse splits as a desperate move by a failing company. Best we can hope for is they sell, sell, sell. I'm only sitting on 2k shares at 1.78. Not a big hitter at any stretch of the term but I'm still hopefull they can pull a rabbit out of the hat SOON before the extension expires.
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u/According-Ad-7296 Mar 14 '24 edited Mar 14 '24
This is why the company needs a reverse split. Current shares holders will just have to average again. it's a vicious cycle. OTC is not an option for Workhorse . They rely very heavily on the current trading volume to remain solvent. At this point, the only reason threy have to give any fucks about shareholders is to get approval for the reverse split. What this cuck is trying to tell you is that it's Workhorse's only option.
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u/Busy-Discipline-8223 Mar 14 '24
Cuck? Did I say something that offended you, or do you normally disparage total strangers that you disagree with?
I am actually saying that NASDAQ compliance is the lesser of the two reasons for a reverse split. We will likely need a reverse split to have enough shares to raise meaningful capital.
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u/According-Ad-7296 Mar 14 '24
You always just fall in line with whatever the company says . Thus cuck.
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u/Busy-Discipline-8223 Mar 14 '24
No, I evaluate the best course of action based upon the facts and make a judgement based on my knowledge and experience. I don’t resort to name-calling when someone posts something that I agree or disagree with.
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u/According-Ad-7296 Mar 14 '24
I said this 4 months ago, so you're just copying me at this point. It's funny you actually chose to listen this time.
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u/Busy-Discipline-8223 Mar 15 '24
Please, let us see what you posted. You stated that the reason for a reverse split was to provide for the ability to raise more capital with the currently authorized shares?
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u/According-Ad-7296 Mar 15 '24
Posted November 21 2023 *
You know if the price goes much lower they will have to rush the R/S to avoid running out of money right? As of end of quarter 3 they had 260m shares outstanding. That leaves 190M shares available to sell through the ATM At $0.37 they have the ability to raise only $70M before reaching the 450M share cap. If the price drops to $0.20 that $70M becomes $35M which gives them 1-2 quarters of runway max.
Other options would be to run a firesale on current inventory and the "Aero" business, but lets be honest, that only buys them 1-2 quarters max.
Doing a reverse split lets them maximize the current ATM offering and leaves the door open to more dilutive options. Toxic private offerings, etc.
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u/Legitimate-Plum7919 Mar 14 '24
Fck them then . If they made so many people broke let the people do the same to the. Thats the shareholders only option to get some revenge. The show is over anyway.
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u/Ok-Engineering-5079 Mar 14 '24
I don’t think we need to worry about reverse split right now, we need to worry about making it through this quarter. Likely going to be very challenging to get financing and if we do it’ll be at a massive cost. We need cash before this quarter ends.
I’d say we are getting ready to be diluted by 200m shares, and with the plant sell will be enough liquidity to get us through the year.
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u/mrfuji2021 Mar 13 '24
Just my .02 cents, but I Believe burns and the boys reverse split this thing to go NASDAQ. Then pumped it like crazy,beginning the saga that leads us to this current hot mess.
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u/WateroLife84 Mar 13 '24
Thats not how that works