Some Shareholder Lawsuits are Stupid

Why "some shareholder lawsuits are stupid"? Because some of them really are just legal extortions to get money out of a company following some bad news. 

Let's take the most recent lawsuit of some shareholders of Workhorse. 

For those of you not aware, US Postal Service needs to replace those decades-old mail trucks (LLV - long life vehicle) with something that are just as rugged, but a bit more modern, less emissions, newer tech like autobrake, 360 camera, etc, enclosed cabin for AC... They had tried to pick this for many many years, and in February 2021, they finally picked Oshkosh to build the new truck. 

So that means all the other bidders, including Workhorse, lost. And it's interesting that USPS didn't give out any consolation prices, like a small piece of the contract to other bidders. 

This is where it gets interesting. At least one congressman is calling for an investigation into the contract award. It is a coincidence that in his district is an EV (Electric Vehicle) maker of which Workhorse owns 10%? And Workhorse stock price, which took a beating after the USPS announcement, is creeping back up, now that there may be a chance of reversal.  

But we're here to talk lawsuits. And it seems at least two shareholder rights law firms have filed class-action lawsuits against Workhorse. One of them (Rosen) alleged that a) company "knew" that USPS is not going electric, and Workhorse's entry for NGDV (next-generation delivery vehicle, the USPS contract) would never be accepted because it's EV, and 2) therefore mislead investors into believing the company has a chance in the contract. The other lawsuit, launched by Brager Eagel & Squire, alleged essentially the same things.

I have no particular like or dislike for Workhorse. Not even when Trump tried to shill for them by exposing their deal to buy a portion of Lordstown Motor (another EV maker). And while they do produce EVs, their last consumer attempt, the W-15, was just really a GMC Sierra 1500 with Electric guts (easy when it's a body-on-frame pickup truck) and some new cladding with a disappointing 80-mile range without a range extender. It wasn't discussed what their NGDV entry's range would be. 

But let's discuss the contract. Sure, it's bad to lose a contract, but it's not as if that's the only thing the company makes. Furthermore, it was one of the five finalists, among who knows how many entries. I believe even the Indian company Mahindra Group entered something based on their truck platform using an American motor. 

But alleging "misleading investors", really? 

To me, this is basically legal extortion. Investors know contract awarding involves winners and losers, esp. huge contracts that involve a government entity. When you lose, you lose. You didn't get a lot of money to grow a new assembly line, but your company didn't really lose much. It's POTENTIAL business, nothing more. 

And CEO making remarks about still in the running for the contract and expressing optimism, in general, is somehow "misleading investors"? Really? 

IMHO, law firms that sue the loser are just trying to make money by forcing the company to settle and pay them off. Insult on top of injury and all that.