What happened

In early July, specialty electric vehicle maker Canoo (GOEV -7.03%) shocked investors with news that it was getting a vehicle order from retail giant Walmart. Investors jumped into the stock, sending it up 80% in a single day. But the stock is down about 25% since then, including a drop of 15.6% today as of 10:43 a.m. ET.

So what

Today's drop came from information gleaned from the second-quarter report Canoo released last night. After Walmart said it would order 4,500 vehicles from Canoo to supply its e-commerce delivery fleet, investors thought it was a lifeline for the company. Canoo said it would build the vehicles at its small Arkansas facility located near Walmart headquarters. But last night, Canoo CEO Tony Aquila said it will initially use a third-party contractor to produce the electric delivery vans. 

Now what

Canoo has reported a net loss of $290 million in the first half of 2022. While it has access to up to $250 million in capital, the company has only $33.8 million in cash and cash equivalents on its balance sheet. The company's survival might be tied to the Walmart business, and it said so publicly yesterday. 

In its quarterly filing, the company stated, "We expect that a substantial portion of our initial revenue will be from one customer. If we are unable to maintain this relationship, or if Walmart purchases significantly fewer vehicles than we currently anticipate or none at all, our business, prospects, financial condition, results of operations, and cash flows could be materially and adversely affected."

When investors heard there is a change in its plans to satisfy the Walmart order before production has even started, they seemed to feel the risk level with Canoo had ratcheted up a notch.