Canoo stock forecast as GOEV suffers a harsh reversal


Canoo (NASDAQ: GOEV) stock price has bounced back in the past few weeks as electric vehicle companies rebounded. The stock, which bottomed at $1.44 in June, has rallied by almost 60% to $2.30. 

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Still, Canoo has fallen sharply from its all-time high. It has dropped by 58% this year and by almost 80% in the past 12 months, bringing its valuation to $173 million. 

Canoo’s recent performance is in line with other electric vehicle companies like Tesla and Rivian, which have jumped by over 40% from their lowest levels this year.

Canoo is making progress

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Canoo’s stock price has tumbled even as the company made strong progress in researching and building its vehicles. 

The company has secured substantial orders from quality companies and organizations like Walmart, NASA, USPS, and the US military 

Just this month, the company announced a definitive agreement for the purchase of 5 electric delivery vans by Go2 Delivery. Go2 will use this small purchase to test the vehicles. If it loves the vans, it has promised to come back and order 85 more trucks.

Canoo hopes to attract more customers who are concerned about carbon emissions and their desire to reach net zero. If the current slate of customers become successful, Canoo could attract customers like FedEx and UPS that buy thousands of delivery vehicles per year.

Also, Canoo is hoping to gain market share internationally. In April, it announced its plan to start selling its vehicles in Saudi Arabia, a market estimated to be worth over $30 billion. It is also looking into other international markets.

Key challenges remain

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While Canoo has made substantial progress, it faces huge competition ahead. First, it is in a highly competitive market. Rivian has opened up its business and is not just selling its delivery vans to Amazon. That is a big threat since Rivian has billions of dollars on its balance sheet and a bigger brand name.

The other American companies working on similar vans are Workhorse Group and Mullen Automotive, which have announced some big orders recently. 

Globally, the biggest competition will come from China, where a company like BYD makes cheap delivery trucks. 

Further, as I have written before, Canoo faces a money problem as we saw with Fisker and Lordstown Motors. Fisker and Lordstown had made a lot of progress in product development but their cash problems pushed them to file for bankruptcy. 

Canoo is in a similar situation as its cash runs out. Its recent document showed that it had less than $10 million in cash and short-term investments. For a company burning hundreds of millions of dollars per quarter. 

Therefore, there is a likelihood that the company will continue diluting its shareholders as it seeks to boost its balance sheet. Indeed, as I have predicted before, the company issued a filing as it seeks to sell 13.7 million of common stock. A day before, the company filed a prospectus to sell 5.57 million shares.

The challenge is that Canoo’s valuation of $173 million is not enough since the company needs substantially more money than that. Therefore, there are still bankruptcy risks as we saw with Fisker.

Canoo stock price analysis

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canoo stock

The 4H chart shows that the GOEV share price has crawled back in the past few weeks. This rebound happened after the company formed a falling wedge chart pattern. In most cases, this pattern is one of the most bullish signs in the market.

The stock has risen above the 50-period Exponential Moving Average (EMA), which is a positive sign. Therefore, the stock will likely undo the recent gains as the dilution risks continue. 

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