What happened
Shares of Canoo (GOEV 19.30%) joined the big jump in many technology and electric vehicle stocks this morning after it reported its third-quarter update last night. But the early jump of nearly 13% didn't hold. As of 2:45 p.m. ET, Canoo shares held onto a gain of 2.6%.
So what
In addition to its quarterly update, the maker of electric lifestyle and work vehicles announced it had entered into an agreement to purchase a vehicle manufacturing plant in Oklahoma City, Oklahoma. That, along with some positive developments for the business, may have prompted the initial spike in the stock today. But Canoo is still not bringing in any revenue, let alone earning profits.
Now what
Since the start of the third quarter, Canoo has announced several agreements for its commercial vehicles. Those included a non-binding order for 4,500 vehicles from Walmart as well as binding orders for more than 12,000 vehicles from a work-ready van rental provider and a national fleet leasing company. And the company said its newly acquired manufacturing facility will be "equipped to ramp to a 20,000 unit annual run rate by the end of 2023."
That all sounds promising, but the stock may have lost some gains today when investors stepped back to look at Canoo's tenuous financial condition. The company reported a net loss of more than $400 million over the first nine months of 2022.
As of Sept. 30 it had just $6.8 million in cash and cash equivalents. It will fund its operations by accessing up to $200 million through a stock offering program. It expects to have about $80 million in fourth-quarter operating expenses, and plans capital expenditures of between $30 million and $50 million in the fourth quarter.
It's clear that existing shareholders will experience dilution, but the more pressing concerns are whether the business can ramp up to a point where it can be sustainable. Even after today's gains, the stock is down 85% this year. It could fall even further if it doesn't start reporting revenue pretty quickly.
