What happened
Canoo (GOEV -2.73%) stock logged its best monthly performance so far in 2023 last month when it surged 35%, according to data provided by S&P Global Market Intelligence.
Canoo has designed a modular, purpose-built electric chassis platform that can be customized for a variety of electric vehicles. The company is building three types of EVs based on the platform: a lifestyle delivery vehicle (LDV), a multipurpose delivery vehicle, and a pickup truck. In July, investors got a glimpse of the kind of potential Canoo's interesting business model could have.
So what
Canoo delivered three new crew transportation vehicles (CTVs) to NASA in mid-July. The CTVs will carry fully suited astronauts, flight support crew, and equipment for nine miles to the launch pad at the Kennedy Space Center in Florida for NASA's Artemis lunar missions.
Investors saw this milestone as evidence of Canoo's viability and wasted no time in betting on the stock. Canoo's CEO Tony Aquila stated the company is looking forward to supporting NASA in "being the transport vehicle for the Artemis lunar missions," indicating there's potential for more such orders in the future.
More importantly for Canoo, having delivered tailored vehicles to such a prominent government agency opens the doors to contracts from other government entities. In fact, in July, Canoo extended its partnership with the U.S. Department of Defense by delivering its Defense Innovation Unit, a modular lithium battery system for use in military vehicles. Canoo already delivered a light tactical vehicle to the U.S. army last year and believes its battery pack could "set the stage for standardization of energy-dense lithium batteries for the U.S. Navy."
Now what
There's no denying that Canoo's versatile and configurable vehicle platform and its purpose-built vehicles make it an offbeat EV company. It has even secured orders for LDVs from Walmart. As of mid-May, Canoo said its total order book was already worth around $2.8 billion. By the end of 2023, Canoo expects to ramp up its production capacity to 20,000 vehicles, a number that could go up to 40,000 units by the end of 2024.
It's great to have big goals, but it's even more important to have the means to meet those goals. Production on scale will require a lot of money -- something that Canoo doesn't have right now. As of March 31, the company had cash and cash equivalents of only $6.7 million and negative cash flows since it's yet to generate revenue.
Investors, perhaps, understand the risks and don't have high expectations of Canoo's upcoming quarterly earnings release on August 14. That, perhaps, explains why the stock has already fallen 17.7% this month so far.