What happened
Specialty electric vehicle (EV) start-up Canoo (GOEV -6.77%) has had a difficult year. Its stock is down 85% year to date after the company nearly went out of business.
But there have been some positive developments over the last few months, and another one has shares moving higher. As of 2:10 p.m. ET, the stock was up 3.1% on the day.
So what
After its first-quarter financial report, Canoo management expressed "substantial doubt" about its future, saying it may not be able to continue operating its business. Since that time, however, the company announced a nonbinding agreement in July for Walmart to purchase up to 9,000 Canoo commercial delivery vans.
Image source: Canoo.
It followed that with fully binding orders for more than 12,000 vehicles from a work-ready van-rental provider and a national fleet-leasing company. That led Canoo to announce plans to acquire a manufacturing facility in Oklahoma City, Oklahoma.
The company said last month that the facility will have an initial annual capacity of 20,000 units, with room to scale up from there. It will begin deliveries in 2023 and should employee more than 500 people. This week, the mayor of Oklahoma City announced on Twitter that the city has agreed to offer Canoo up to $1 million in incentives if the company lives up to its job creation promise.
Now what
A $1 million bonus would be nice, but it's not something that should move the stock on its own. But after the massive drop this year, it doesn't take much positive news to move the shares higher.
Investors should be cautious with the outlook for Canoo. Much of its order backlog is cancellable, so it would make sense to wait for the company to start bringing in revenue, and getting feedback from customers, before investing in this risky name.
