Canoo From Bad to Worse! A Lesson For New Retail investor!
Just weeks ago, Canoo’s stock experienced a catastrophic collapse, plummeting 42% within a mere 21 minutes. Investors who had high hopes for the company—heralded by some as “America’s Next Tesla” and a promising electric vehicle (EV) startup—have been severely disappointed. The stock has fallen dramatically from its initial public offering (IPO) price of over $500 to just over $1.
Canoo, once s hot electric car startups and the creator of, now seems to be on the brink of bankruptcy. The company is in disarray, facing multiple significant issues.
In 2023, Canoo reportedly spent $1.7 million on private jet expenses for its CEO—double its total revenue for the year, which was just $886,000. The company posted a $32 million loss in 2023 and has never turned a profit. Despite claiming thousands of pre-orders for its vehicles, there’s little tangible evidence to support these assertions. Canoo built only 22 vehicles in 2023 and has yet to mass-produce its EV lineup.
To avoid being delisted from the NASDAQ, Canoo initiated a 1-for-23 reverse stock split. While its stock briefly surged following foreign trade zone approval for its Oklahoma City facility, where the rugged new "American Bulldog" EV pickup is being tested, skepticism remains high. The American Bulldog, a versatile and highly practical pickup truck design, has generated enthusiasm but remains unrealized.
The company’s financial troubles don’t stop there. Canoo has reportedly stopped paying its bills, leading to lawsuits. Saxum Strategic Communications, a PR firm contracted by Canoo, claims the company ceased payments 10 months ago, breaching their agreement. Another lawsuit from Air Capital Equipment alleges that Canoo has racked up over $600,000 in unpaid bills, along with thousands of dollars in late fees.
The situation with Canoo is troubling. Management seems to be doing everything they can to keep the company afloat, but as you can tell from my thumbnail, I’m skeptical. Despite their claims of having a “clear path to production” for their electric vans and pickups, it feels like the writing’s on the wall.
Canoo’s free cash flow (FCF) is a critical financial metric, especially for investors assessing the company’s ability to sustain operations. Free cash flow represents the cash generated from operations minus capital expenditures and is often a sign of financial health.
Cash Burn: Recent filings have indicated a high cash burn rate as Canoo has spent heavily on R&D, production ramp-up, and operational costs. As of the latest reports, the company has repeatedly warned about its ability to continue as a going concern.
Funding Needs: Canoo has relied on capital raises, including equity sales, debt financing, and even partnerships (like those with Walmart and the USPS) to bridge cash flow gaps. However, these efforts often dilute shareholder value or come with conditions that strain the company further.
For investors still hanging on, it might be time to consider cutting losses because the situation is looking grim. Personally, I loved the quirky and practical design of Canoo’s EVs.
Management turnover—Canoo has gone through three CEOs in recent years—hasn’t helped. The lack of consistent focus on a core customer base and repeated delays in production have eroded investor confidence. The company even recently laid off 23% of its workforce, though that amounted to only 30 employees.
Now, let’s talk about the stock. At the time of this recording, Canoo’s stock closed on Monday at a mere $0.07 per share. They previously performed a reverse stock split to stay listed on NASDAQ, but even that didn’t provide lasting stability. With the stock at such a low point, I wouldn’t be surprised if it slips into the teens soon.
Looking at Canoo’s five-year history, the trajectory is heartbreaking. From its initial high of $466 per share in 2020 to where it stands today, the collapse has been steep. Even after a brief surge earlier this year to $4.80, the decline resumed rapidly.
At this stage, the company’s best hope might be acquisition by a larger player—perhaps an Apple or a Sony looking to enter the EV space or a competitor like Rivian seeking to expand into smaller delivery vehicles. Otherwise, Canoo appears to be running out of time and options.
Investors have lost confidence, with the stock plunging from $466 at its December 2020 IPO to just $0.07 today. 99.99% Losses continue to mount, and production delays persist.
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