Shares of EV start-up Canoo (GOEV 2.41%) more than doubled Tuesday morning on news of a big new deal with retailing giant Walmart. As of 10:45 a.m. ET, Canoo stock was still 80% above Monday's closing price.
Canoo bills itself as a specialty electric-vehicle (EV) maker, with a van-like lifestyle vehicle, pickup truck, and multipurpose-delivery vehicle (MPDV). But after the company reported first-quarter earnings in early May, management issued a warning in the company's Securities and Exchange Commission filing. It stated, "Our management has performed an analysis of our ability to continue as a going concern and has identified substantial doubt about our ability to continue as a going concern."
Prior to today, Canoo stock was down 70% for the year, with investors seeming to abide by management's warning and give up on the company. But the deal announced with Walmart changed that this morning.
Walmart agreed to purchase 4,500 Canoo lifestyle delivery vehicles (LDVs), with an option for a total of 10,000 units to support its e-commerce business. Canoo says the LDV will begin delivering online orders for Walmart next year. Walmart senior vice president of innovation and automation David Guggina stated, "By continuing to expand our last mile delivery fleet in a sustainable way, we're able to provide customers and Walmart+ members with even more access to same-day deliveries while keeping costs low."
The deal may have just saved Canoo's business. The company reported a net loss of $125 million in the first quarter, and was down to just $104.9 in cash and cash equivalents as of March 31, 2022. Today, investors are cheering the new lifeline, and the stock is rocketing higher, as a result.