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Why Canoo Jumped 15% Today

By Howard Smith - Jan 5, 2021 at 10:59AM

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The specialty electric-vehicle maker got support from a big name.

What happened

Shares of purpose-built electric-vehicle (EV) maker Canoo ( GOEV -10.61% ) spiked 15% Tuesday morning and remained up 12% as of 10:30 a.m. EST. 

Canoo first began trading publicly late last month after merging with a special purpose acquisition company (SPAC). 

So what 

After surging prior to the closing of the transaction, shares had been on a steady decline until today. Today's bounce comes after shares were called a buy by Jim Cramer on CNBC's Mad Money show last night. 

Man standing in front of open doors of the Canoo Lifestyle electric vehicle

Canoo Lifestyle EV. Image source: Canoo.

Canoo shares had dropped about 30% since its public launch. After the stock closed at $12.50 per share on Monday, Cramer said, "I'd be a buyer of Canoo down here at $12." 

Now what

Canoo is aiming for a EV niche using a "skateboard" platform that allows more vehicle cargo space for its "lifestyle" van-like vehicle and a multipurpose delivery vehicle (MPDV). 

The company is also trying to differentiate itself with its business model. It will use a membership plan for Canoo vehicles that will provide services including maintenance and battery charging, as well as month-to-month flexibility for returns. 

The lifestyle vehicle will have a 250-mile range and capacity for seven seats. Canoo MPDVs will be available in cargo volumes of 200 cubic feet and 450 cubic feet, both of which will have shorter battery range than the lifestyle vehicle. 

The company won't begin producing the vehicles until 2022, so investors today need to know that there is risk of competition or other developments until then, making it a speculative investment. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Canoo Holdings Ltd. Stock Quote
Canoo Holdings Ltd.
GOEV
$10.19 (-10.61%) $-1.21

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