Canoo Stock Price Forecast
Canoo (GOEV) is an American company that engineers electric vehicles. Stefan Krause, former chief financial officer of Deutsche Bank, and Ulrich Kranz, formerly a senior executive at BMW, founded the company in 2017 as Evelozcity. As of Sept. 9, Canoo stock was trading at $2.69 a share, down 65.15% from the beginning of the year.
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Canoo currently has four products in development: a lifestyle vehicle, a multipurpose delivery vehicle, a pickup truck and a platform, which is basically an electric chassis. Canoo vehicles will be made in America, which will give the company an edge given the electric vehicle tax credit that is part of the recently signed Inflation Reduction Act.
The company’s philosophy is to design electric vehicles for everyone. This is reflected in the price point, which was announced in May 2021 to range from $34,750 to $49,950 for the Lifestyle Vehicle, depending on the model. The vehicles are intended to be customizable by both the manufacturer and the consumer.
Canoo Stock Price Forecast
According to Yahoo Finance, analysts seem to see a rosy future for Canoo. In August, three analysts reported on the company, and all three rated it a buy. The average price target (the expected trading price a year from now) was $9.50, with a low of $3.50 and a high of $15.00, a big range that demonstrates the stock’s uncertainty.
Earnings per share forecasts reflect the fact that Canoo is not yet profitable and, in fact, has no sales yet. In the second quarter of 2022, the company lost $0.56 per share. According to CNN Business, analysts’ estimates for the second half of the year are for Q3 EPS of -$0.58 to -$0.54, with a consensus estimate of -$0.56, and for Q4 EPS of -$0.63 to -$0.49, with a consensus estimate of -$0.56.
CNN Business notes that the analysts’ sales forecasts for 2023 range between $342.7 million and $605 million, and their consensus estimate is $482.6 million.
The Bull Case for Canoo
Despite still being in preproduction, the company has signed some important contracts. In July, Canoo announced that it had an agreement with Walmart for the retail giant to purchase 4,500 electric delivery vehicles. Walmart announced that it expected to begin using the vehicles in 2023.
Also in July, Canoo announced in a press release that the U.S. Army had chosen its multipurpose platform for demonstration and analysis purposes. Prior to that, it was selected by NASA to be used to transport crews to the Artemis launch site “for lunar missions to establish the first long-term presence on the moon,” according to the press release.
With recent legislation that encourages Americans to buy electric vehicles and specifically those made in America, Canoo is poised to benefit from increased demand.
The Bear Case for Canoo
Canoo has yet to sell a single vehicle, although it does have the above-mentioned contracts. Safety testing is still in process, and the company has been through several changes in upper management and has created and dissolved a number of partnerships during its short lifetime.
In the company’s first quarter 2022 earnings report, issued in May, it stated that it was running low on cash and might not have enough cash to continue operations past the second quarter. “As of the date of this announcement, we are reporting that there is substantial doubt about the Company’s ability to continue as a going concern,” the earnings report stated.
Chairman and CEO Tony Aquila indicated that the company has access to $600 million in capital as of May. The contracts signed in July should also provide some breathing room, but there appears to be little room for delays or errors.
Downsides To Consider Before Buying Canoo Stock
Canoo has production plants in Arkansas and Oklahoma, but production has not yet begun. In May, the company announced that anticipated production dates could slip into 2023 in Arkansas due to the ongoing global chip shortage. The company also indicated that production at the Oklahoma plant could be delayed until 2024.
Perhaps more concerning for investors is the Securities and Exchange Commission investigation that began in 2021. The investigation was brought on by shareholder class action suits and questions around the company’s merger with Hennessy Capital Acquisition Corp.
Is Canoo a Good Long-Term Investment?
It’s a bit early to tell if Canoo has a future, and if so, what that future is likely to look like. While it has secured some significant contracts, it has yet to deliver on them. Making a decision now to hold the stock long term is probably premature.
The potential for Canoo to become a leader in the electric vehicle market is there, but the company needs to find its footing. For risk-taking investors, it may be worth taking a small position now, but for others, it’s a company to keep an eye on but is probably too volatile at this point in time. If Canoo is able to meet its production targets, it could benefit significantly from the new focus on electric vehicles made in America, so the company certainly bears watching.
Data is accurate as of Sept. 12, 2022, and is subject to change.
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- Canoo. 2022. "Walmart to Purchase 4,500 Canoo Electric Delivery Vehicles to be Used for Last Mile Deliveries in Support of Its Growing eCommerce Business."
- NPR. 2022. "Biden signs sweeping climate, health care, tax bill into law."
- Walmart. 2022. "Walmart To Purchase 4,500 Canoo Electric Delivery Vehicles To Be Used for Last Mile Deliveries in Support of Its Growing eCommerce Business."
- Canoo. 2022. "U.S. Army Selected Canoo's Multi-Purpose Platform For Analysis & Demonstration."
- Canoo. 2022. "CANOO INC. ANNOUNCES FIRST QUARTER 2022 RESULTS."
- Reuters. 2022. "Canoo production starts could slip, but CEO remains confident in funding."
- Canoo. 2021. "Promises Kept – Canoo Pricing For Lifestyle Vehicle Is Accessible For Everyone."
- Bloomberg. 2021. "Electric Vehicle Startup Canoo’s CEO Discloses SEC Investigation."