The electric-vehicle start-up Canoo (GOEV) shares rallied 16.8% after closing at $11.05 on June 15.
Canoo, which made its Nasdaq debut on December 22, 2020 and is still in the nascent stages of development, has not yet commenced production and sale of products. The company plans to launch its first lifestyle vehicle in late 2022, following it up with a delivery vehicle in 2023 and a sports vehicle in 2025.
However, the company is making all efforts to gain a toehold in this fiercely competitive EV industry. With a market capital of $2.62 billion, GOEV has gained 46.4% in the past month, but has lost 44.5% over the past six months. (See Canoo stock analysis on TipRanks)
The suggestion made by a user yesterday in Reddit’s Wallstreetbets forum that Canoo could be considered as both a short and long term “tremendous play,” is expected to have caused the stock to spike to unusual highs.
Apart from the above, there have been a series of events happening lately which could have sparked optimism among the investors regarding the company’s future.
Canoo Debuts Air Purifying Climate Control
Yesterday, the company shared details about its air purifying technology. Pre-loaded in the Premium and Adventure packages of its Lifestyle Vehicle, the Wellness Package will help to improve the air quality and capture odors like cigarette smoke, and is expected to kill viruses instantly, including the deadly Covid-19 virus, keeping the cabin interiors germ free.
Investor Relations Day to Be Held Soon
On June 7, the company announced that it will host an Investor Relations Day on June 17. The event will most likely focus on the company’s efforts to increase the market reach of its electric vehicles to the maximum. Moreover, it will address its efforts to increase productivity of the owners, focus on the use cases, and discuss multiple revenue generation opportunities.
The investor day announcement is expected to be one of the major catalysts for the increase in the share price of the company.
However, it remains to be seen whether the upcoming event can make the investors happy, causing a record jump in its share price.
Partnership Drives Growth
On May 17, Canoo announced its partnership with the University of Wisconsin-Madison. The deal is aimed at increasing new advances in electric vehicle technologies and lowering the overall cost of owning an electric vehicle.
EV Market Holds Promise
There is no doubt that EVs have become a much more attractive choice to consumers in recent years, thanks to increased range, battery life, efficiency, and affordability. At the same time, reduced energy supply costs and the benefit of carbon emission reductions could be the essential reasons for the increasing numbers of EVs.
This is evident from the figures provided by various research firms. Per a report from Statista, the size of the global electric vehicle market is expected to increase almost five-fold to reach an estimated global market size of approximately $803 billion by 2027, at a compound annual growth rate (CAGR) of more than 20% in the 2019-2027 period.
Further, according to a study by the Boston Consulting Group, the global market share of electrified cars, SUVs, and other light vehicles grew from 8% in 2019 to 12% in 2020, and has shown continued strength in early 2021. Going forward, EVs are expected to account for more than half of light vehicles sold globally by 2026.
Canoo remains well-positioned to gain from the growing EV market.
Canoo reported its first quarter financial results on May 17. The company is currently not generating any revenues. For first-quarter 2021, the firm incurred loss per share of 7 cents.
Following the Q1 results, Roth Capital analyst Craig Irwin reiterated a Hold rating on the stock and decreased the price target to $7.00 from $12.00. This implies 36.7% downside potential to current levels. The analyst expects the upcoming SEC investigation to be a weight on the shoulders of the company in the near-term. The SEC has announced that it will initiate a fact-finding investigation of Canoo, focusing on the company’s merger with a special purpose acquisition company (SPAC), among other matters.
On April 20, another analyst Merrill Lynch analyst John Murphy initiated coverage of the stock with a Sell rating and a price target of $6 (45.7% downside potential).
Commenting on Canoo’s recent quarterly conference call in which it adjusted its business model and withdrew long term financial projections, Murphy said, “Altogether, the shift in strategy appears logical, the change introduces further risk around the company’s ability to execute in a timely fashion.”
Overall, the stock has a Hold consensus rating based on 1 Buy, 1 Hold, and 1 Sell. The GOEV average analyst price target of $10.33 implies 6.5% downside potential from the current levels.
TipRanks data shows that financial blogger opinions are 58% Neutral on GOEV, compared to a sector average of 71%.
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Disclosure: Shalu Saraf held no position in any of the stocks mentioned in this article at the time of publication.
Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.