What happened
Investors in Canoo (GOEV -8.52%) have had a rough year in 2022 with the stock plunging by 85%. But shares in the electric vehicle (EV) maker jumped today, and there are two likely reasons. After popping 8.4% early Thursday, Canoo stock was holding on to a gain of 6.5% as of 12:30 p.m. ET.
So what
One bit of news that might have investors more positive on the stock is a new report from EV sector site Electrek. The report summarizes a lawsuit filed by Canoo last week against former employees it says stole Canoo's intellectual property to start a rival EV company.
Harbinger Motors is run by several executives formerly with Canoo, including Phillip Weicker, the chief technology officer and co-founder for Harbinger. Weicker was also a co-founder of Canoo. Like Canoo, Harbinger plans to make commercial EVs used for service and delivery. Canoo is also accusing Harbinger of recruiting a large number of its employees. In a statement published on Electrek, Harbinger called the suit "meritless" and vowed to defend itself "vigorously."
It's too early to see how the lawsuit might evolve or whether the outcome will benefit Canoo. But one thing that should benefit it beginning in the coming days are tax incentives related to the Inflation Reduction Act (IRA) that will become effective next week. The IRA calls for tax credits of $7,500 or $40,000 for commercial electric delivery vehicles. The incentive is based on the size of the delivery vehicle and doesn't include "made in the USA" restrictions written into the IRA for electric passenger vehicles.
Now what
In its most recent investors presentation last month, Canoo said it has $2 billion in orders, of which $750 million are contractural commitments. Investors are probably thinking Canoo's order book could get a boost after the IRA credits kick in next week.
They will have to wait until the company's fourth-quarter update to find out more about the backlog. And if the lawsuit against Harbinger is successful, there may be one less competitor to worry about, too.
