Canoo (ticker: GOEV) reported a full-year 2020 loss from operations of about $128 million, with no top-line revenue. More important, it ended the year with more than $700 million on the balance sheet after completing a merger with a special-purpose acquisition company, or SPAC.
In 2021, the company expects to spend roughly $48 million in cash on operational expenses, with another $11 million or so of capital outlays. The company spent $90 million on research and development in 2020, but a 2021 projection wasn’t included in Canoo’s news release.
Even if R&D spending is flat at $90 million, Canoo has more than enough cash to last through commercialization of its first products. Canoo is slated to deliver its first passenger vehicle in 2022 and a delivery van in 2023. The company also launched a pickup truck this month that is also due to be delivered in 2023.
The $11 million Canoo said it plans in capital spending isn’t anywhere near enough to build a plant churning out cars, but Canoo is pursuing an asset-light strategy. It plans to let others manufacture the cars it designs. That is similar to Fisker’s strategy, while Lucid Motors intends to control its own manufacturing.
Wall Street coverage appears to ramp up more slowly for companies that take that route than for companies that have traditional IPOs. There might be a couple of reasons for that.
First, analysts appear to prefer to wait until SPAC mergers are wrapped up before picking up coverage. That means the company, essentially, trades for months without any coverage.
What is more, no traditional IPO means no role for traditional underwriters, the large brokerage firms where analysts work. It might take longer for an analyst to learn enough about a company to make a call on the stock without being exposed to it before an IPO.
One analyst covers Canoo stock, R.F. Lafferty’s Jamie Perez. He rates the shares at Buy and has a target of $23 for the price.
There isn’t a lot of Canoo-specific news to pin Monday’s decline on. But all EV stocks have been struggling lately. EV stocks Barron’s tracks dropped 14%, on average, this past week.
(TSLA) shares dropped 1.5% Monday and are down more than 13% year to date.
A combination of higher interest rates and a global automotive microchip shortage that is curtailing production appear to be the main reasons for EV stocks’ recent weakness.
Despite the stock’s 53% decline from its 52-week high of $24.90, management remains optimistic about its future and the EV industry. “Globally there are approximately 1.5 billion light vehicles and we believe that 80% of those will be replaced by EVs over the next 4 to 5 car generations,” said Tony Aquila, Canoo’s executive chairman. in the company’s news release. “Canoo’s technology gives us a blank canvas to reimagine how the EV fits into our changing auto ecosystem.”
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