What happened
The combination of price cuts spreading through its industry and pullback from a hot buyout rumor really put the brakes on Canoo (GOEV 83.33%) stock Monday. The electric vehicle (EV) maker's share price fell by nearly 12% on the day, a far steeper decline than the 1.3% slip of the S&P 500 index.
So what
Frequently on the stock market, a company's value soars or swoons on developments outside its control. That was the situation over the past few trading days with Canoo.
The major item making the EV sector as a whole volatile was a hot rumor at the end of last week that the huge Saudi Public Investment Fund (PIF) was eager to buy the remainder of high-end EV car maker Lucid Motors (PIF already holds a more than 65% stake in the company).
But hot rumors in the market have a way of turning cold quickly if they don't come true. On Monday, Canoo and a host of other EV stocks that popped on Friday suffered pullbacks as a result.
Another major factor in the decline of such titles Monday -- Canoo included -- is that price cuts are starting to become quite the trend.
No less a manufacturer than Ford became the latest manufacturer to slice, announcing Monday that it is reducing the price of its Tesla-like EV, the Mustang Mach-E SUV, by an average of almost 6%. Tesla, of course, started the ride with its own round of cuts announced earlier this month.
OTC: GOEV
Key Data Points
Now what
All this makes the stocks of the lower-tier EV makers like Canoo feel like wait-and-sees at the moment. We're still watching to see how extensive, and how deep, these price cuts will go. Meanwhile, even if the PIF/Lucid rumors prove to be true and a big deal is agreed upon, this won't necessarily mean other EV companies will be targeted by the Fund or other well-capitalized investors.
