What happened
Shares of electric vehicle (EV) start-up Canoo (GOEV 19.30%) spiked by as much as 18.5% Friday morning after a company insider showed serious confidence in the company's future with a big share purchase. As of 10:50 a.m. ET, Canoo shares were holding onto a gain of 12%.
So what
Investors have had doubts as to whether Canoo could actually get its business off the ground. Management itself expressed "substantial doubt" about its future earlier this year when it said in its first-quarter report that it may not have enough cash to survive. Investors reacted to that uncertainty by pushing the stock down 85% year to date. But Canoo CEO Tony Aquila just bought about $10 million in shares this week according to a Form 4 Securities and Exchange Commission filing.
Now what
Subsequent to the "going concern" notice, Canoo has announced several agreements for its commercial electric vehicles. Those included a non-binding order for 4,500 vehicles from Walmart as well as conclusive orders for more than 12,000 vehicles from a work-ready van rental provider and a national fleet leasing company. The company also announced plans to acquire a manufacturing facility in Oklahoma earlier this month.
Image source: Canoo.
As of Sept. 30, Canoo only had $6.8 million in cash and equivalents on its balance sheet, but it had access to up to $200 million more through a stock offering program. Its CEO seems to think that will be sufficient to keep the company going until it can start bringing in revenue from its purchase agreements.
Aquila purchased more than 4.5 million shares directly at a price of $1.11 per share and an equal amount through limited liability companies in which he is a managing member. His total holdings now represent more than 19% of the company's outstanding shares. The executive clearly doesn't think a bankruptcy is coming any time soon, and investors boosted the company's stock Friday as a result.
