Please ensure Javascript is enabled for purposes of website accessibility

Why Canoo Stock Sank Almost 30% in March

By Howard Smith - Updated Apr 6, 2021 at 11:56AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors punished the electric vehicle start-up after it reported financial results at the end of the month.

What happened

Electric-vehicle (EV) maker Canoo (GOEV 7.81%) began trading publicly last December after it closed its merger with a special purpose acquisition company (SPAC). On March 29, the company released its first financial quarterly report since then, and investors hit the shares hard. For the month of March, shares of Canoo fell 29.8%, most of which came on the day after its financial update

So what

For the year, Canoo reported a net loss of about $90 million, which was about half as much as the company lost in 2019. Canoo has yet to begin producing and selling its products, so losses are expected while it remains in its pre-revenue stage. But even after the stock had lost about 50% over the past 12 months, it was still valued at a market capitalization of more than $3.5 billion prior to the sell-off induced by the earnings report. 

Canoo multi-purpose delivery vehicle (MPDV) parked outside a facility

Canoo's multipurpose delivery vehicle (MPDV). Image source: Canoo.

Now what

Canoo plans to use a single multipurpose "skateboard" platform for several models, including its vanlike lifestyle vehicle, a multipurpose delivery vehicle (MPDV), and a pickup truck that the company recently revealed. It plans to begin selling its lifestyle vehicle next year. 

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 self-contained platform allows for additional interior or cargo space. 

The pickup truck, unveiled earlier in March, is aimed at commercial and recreational uses. Executive chairman Tony Aquila said in a statement: "Our pickup truck is as strong as the toughest trucks out there and is designed to be exponentially more productive. ... We made accessories for people who use trucks -- on the job, weekends, adventure."

Investors aren't quite ready to embrace the potential for the maker of purpose-built EVs. Its shares have continued to slide into April, as the market as a whole rotated away from more-speculative names in the EV sector. Shares are down an additional 5% since the end of March.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Canoo Holdings Ltd. Stock Quote
Canoo Holdings Ltd.
$3.59 (7.81%) $0.26

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/18/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.