What happened
Shares of electric automaker Canoo (GOEV 2.59%) were sliding today, likely on several pieces of news. First, an analyst cut the company's price target yesterday. Additionally, investors may be getting nervous about the state of the auto industry, as GM announced today that 5,000 of its salaried workers accepted buyouts.
That news comes just a day after some investors worried that Tesla will need to continue to cut its car prices to keep its EV sales strong.
As a result, Canoo's shares tumbled 4.2% as of 11:01 a.m. ET.
Image source: Canoo.
So what
R.F. Lafferty analyst Jaime Perez lowered Canoo's share price target yesterday from $6 to $3. The analyst kept a buy rating on the stock but lowered the price target because the firm expects Canoo to only have $225 million in sales in 2024 and only "modest deliveries" this year.
Investors typically don't like to see analysts lower the price target for a stock, and they were especially on edge today after GM said that 5,000 of its salaried workers accepted buyouts. The company announced the buyouts last month, and the large number of employees who accepted the option is an indication that the automotive industry is still reeling right now amid rising interest rates and high inflation.
GM is in the midst of transitioning its large vehicle lineup to EVs, so the company offering buyouts to employees could be viewed as a generally negative development for the EV industry.
Additionally, Tesla reported fourth-quarter deliveries of 422,875 vehicles yesterday. And while that number was a 36% increase from the year-ago quarter, the growth came after the company cut prices across the U.S., Europe, and China. Some Tesla investors were disappointed with those results, and that sentiment may be spilling over to Canoo shareholders today.
Now what
Canoo reported its fourth-quarter results at the end of March and, notably, the company delivered its first vehicle to a customer. That was good news for the company, but Canoo has yet to begin ramping up production and is losing money fast.
If the automotive industry is feeling a slowdown in demand right now -- as GM's buyouts and Tesla's price cuts indicate -- then it's going to be even harder for Canoo to find its footing.
