Canoo (NASDAQ:GOEV) is an LA based EV manufacturer which uses an innovative skate-board platform to build its vehicles. Canoo first caught the attention of Wallstreet during the SPAC craze of 2020, when the EV company merged with Hennessy Capital Acquisition Corp IV Class A (NASDAQ: HCAC).
The companies reverse merger was completed in December 2020 and raised $600 Million for Canoo to expand their EV business. Since listing, GOEV stock has struggled to maintain its 2020 momentum, currently trading at a 50% discount to its initial PIPE offering price of $10.
Majority of the SPAC market hype has now simmered, and EV start ups have been hit particularly hard in recent months. So can GOEV stock rebound or are investors in for more downside? In this article we will dive into the GOEV Stock Forecast and discuss the outlook for Canoo moving into Q2.
The Hennessy Capital Merger boosted GOEV’s cash on hand
In 2020, numerous EV innovators entered the US markets via raising capital through a Special Purpose Acquisition Company (SPAC). The SPAC merger between Hennessy Capital and Canoo was finalised on the 21st of December, 2020.
Both companies merged into one under the name Canoo Inc (NASDAQ:GOEV). The transaction raised roughly $600 million in capital that has been added to Canoo’s balance sheet. The funding will assist with the development and manufacturing of Canoo’s innovative skate-board platform.
However, in the companies most recent quarterly earnings call, Canoo reported $224.7 million in cash or equivalents as of December 31, 2021. This is compared to $414.9 million reported in Q3, suggesting the company has a high cash-burn rate.
Canoo Lifestyle Vehicle production expected in Q4 2022
In the third quarter, Canoo announced that its advanced manufacturing production in the U.S. will begin before Q4 2022, accelerating its schedule. This means Canoo will begin manufacturing its Lifestyle Vehicle at its Oklahoma factory before the fourth quarter of 2022.
In 2021, Canoo picked Netherlands-based VDL Nedcar as a key manufacturer for the Lifestyle Vehicle in Europe, opening up the lucrative European market to Canoo. However, the companies partnership with VDL has ceased.
The manufacturer was expected to produce 1,000 units in 2022 and 15,000 units by 2023 including its deal with VDL. However, Canoo has switched their focus to US manufacturing with now with their planned manufacturing facilities in Arkansas and Oklahoma to now produce 3,000-6,000 electric vehicles in 2022. In 2023, production in the US will increase to between 14,000-17,000, 40,000-50,000 in 2024 and 70,000 to 80,000 vehicles in 2025, according to the company’s headquarters.
“Canoo is now in a position to issue guidance at a time when many others in the industry are reducing targets and projections. The Company has now refined its manufacturing strategy and assembled a team to execute the production roadmap for 2022 – 2025”said Tony Aquila, Investor, Chairman & CEO at Canoo Inc.
GOEV Stock Forecast: The Take From Wallstreet
Midway through December, Roth Capital analyst Craig Irwin upgraded Canoo to Buy from Neutral with a price target of $14, up from $9. Irwin noted the boosted valuation comes after Canoo announced higher delivery guidance and the outlook for abundant catalysts as gamma vehicles start rolling in early 2022.
With non-dilutive financing and a capital light manufacturing strategy in Arkansas, Irwin sees current cash as adequate for initial 2022 production, before the Mega Micro facility in Pryor, Oklahoma comes online in 2023. The analyst added that vehicle demand should materialize as primary trading catalysts as we move through 2022. The analyst is yet to update his valuation following the companies Q4 results.
The risks of the GOEV Stock Forecast
Over the past 12 months, Canoo has changed its approach towards commercialisation. In 2020, Canoo had primarily focused on their subscription model alongside engineering services to generate a large portion of its revenue.
However, the company has made a pivot in the way it will approach commercialisation. Canoo has de-emphasized its engineering services and pushed back its proposed subscription model for the lifestyle electric vehicle.
These aspects made up a large portion of forecasted revenue over the next 5 years in the companies 2020 Investor Presentation. This is a factor investors must be aware of as it has changed the companies initial revenue outlook for 2025 with revenue projected to reach $2.34 Billion. With changes in the companies delivery timeline, investors should note this will directly impact these forecasts.
The Bottom Line – GOEV Stock Forecast
Overall, the companies outlook has pivoted in the past 12 months due to major changes in the companies commercialisation strategy.
Nevertheless, recent consensus on Wallstreet remains somewhat bullish despite this fact, with Craig Irwin upgrading Canoo to Buy with a price target of $14. Furthermore, GOEV stock has caught the attention of Reddit as GOEV has an extremely high level of short interest.
However, the volaitlity of the de-spac market may exceed some investors risk appetite. The fallout of the European manufacturing deal was expected, and the companies shift towards vehicle production in North America has actually boosted the companies production guidance. We will see how Canoo progress in the coming quarters as they close in on their first deliveries.
Written by Tyger Fitzpatrick
The information above is not financial advice and does not constitute as a recommendation. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
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