What happened
Start-up electric vehicle (EV) maker Canoo (GOEV 2.59%) provided two bits of news to start the week, and investors initially pushed the stock higher as a result. But not all the news was good for shareholders. The stock jumped almost 4% in early trading, but by 10:55 a.m. ET, shares had turned negative by 2.9%.
So what
The good news from the company was that it now has a long-term lease agreement for a manufacturing facility in Oklahoma. The company had previously said it was looking to locate its factory in the state, and now has a 10-year lease agreement for the plant. The company was previously planning to purchase its manufacturing facility, but the new lease saves it upfront capital.
Canoo separately said it was raising additional capital through the conversion of previously issued warrants into common stock. The company could receive up to nearly $36 million from the payment on the exercise price by the holder of the warrants.
Now what
Shareholders had already been informed that Canoo would be issuing stock and warrants from time to time to raise needed capital. The share price has plummeted over the past year as a result. That's why there wasn't more of a negative initial reaction for that piece of news.
The manufacturing facility, after all, is the only way the company can begin to generate revenue and offer any potential return for shareholders. So it makes sense the news was recognized as a positive step.
But Canoo still has a long way to go to survive and create a successful business. There won't be a sustainable positive catalyst for the stock until the operation gets up and running and sales grow. Canoo does have some early orders for its work and lifestyle van-like EVs. Interested investors should watch for how those orders are received by customers in future financial and operational updates.
