A tweet by President Donald Trump sent shares of penny stock Workhorse soaring Wednesday.
Shares of the Ohio-based automaker, which makes electric vehicles, jumped more than 214%. The stock closed at $2.65 after opening at 82 cents on Wednesday. Workhorse has a market value of just $173 million.
In a tweet Wednesday, the president said that General Motors CEO Mary Barra informed him that GM would sell its shuttered Lordstown manufacturing plant to Workhorse to build electric trucks. GM later clarified that it is still in talks about a potential sale of the Warren, Ohio-based plant.
Trading in stocks below a dollar is often a risky business because of potential for outsized moves. Workhorse has had an average daily volume of 345,127 shares over the last month. By the closing bell on Wednesday, its trading volume was up to 45.9 million shares.
Analysts at Cowen said the Trump tweet was behind the surge. The tweet crashed the company's website, which was still inaccessible about three hours after the Trump mention.
Cowen also said Trump's comments raised speculation that "Workhorse is likely to be a vendor for the US Postal Service program."
"Based on media reports and comments from the US Postal Service, testing for the next generation vehicle is done and a request for production is due later this year," Cowen analyst Jeffrey Osborne said in a note to clients Wednesday.
Workhorse told CNBC it was one of the finalists being considered for the postal service contract but would not comment further.
"We are pleased with this development, but note the tweet from Trump is incredibly vague as it relates to financial ramifications for Workhorse," Osborne said.
GM's Lordstown assembly plant shut down in March in an effort by the automaker to avoid making the same financial mistakes that sent it into bankruptcy in 2009. Trump has blasted GM's decision to close the plant, which produced more than 16 million vehicles over a span of several decades.
GREAT NEWS FOR OHIO! Just spoke to Mary Barra, CEO of General Motors, who informed me that, subject to a UAW agreement etc., GM will be selling their beautiful Lordstown Plant to Workhorse, where they plan to build Electric Trucks. GM will also be spending $700,000,000 in Ohio...— Donald J. Trump (@realDonaldTrump) May 8, 2019
Workhorse manufactures electric delivery and utility vehicles. It also makes a carbon-fiber, helicopter-type flying vehicle called the SureFly Octocopter.
"This potential agreement creates a positive outcome for all parties involved and will help solidify the leadership of Workhorse's role in the EV community," Workhorse CEO Duane Hughes said in a press release Wednesday.
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