Tag: Canoo

Electric vehicle startup Canoo files for bankruptcy, ceases operations

(Photo: Canoo)

The medium-duty electric vehicle space continues to get smaller. Seven-year-old electric vehicle startup Canoo has filed Chapter 7 bankruptcy and announced an immediate halt to operations. A press release noted the liquidation process is being overseen by a bankruptcy trustee in the Delaware Bankruptcy Court.

Canoo Inc., once listed on the Nasdaq Composite under the ticker symbol GOEV, was a notable player in the EV market, particularly in the electric cargo segment. Despite its partnerships with NASA, the Department of Defense, the U.S. Postal Service, the state of Oklahoma, Walmart and other groups, the company struggled to secure the financial backing to sustain operations.

The bankruptcy filing cites unsuccessful attempts to get financing from the U.S. Department of Energy’s Loan Program Office as a significant factor leading to Canoo’s insolvency. Nor did efforts to obtain capital from foreign sources stave off bankruptcy. Canoo had total liabilities exceeding $164 million against approximately $126 million in assets.

“We would like to thank the company’s employees for their dedication and hard work,” said Chairman and CEO Tony Aquila. “We know that you believed in our company as we did. We are truly disappointed that things turned out as they did. We would also like to thank NASA, the Department of Defense, The United States Postal Service (‘USPS’), the State of Oklahoma and Walmart for their belief in our products and our company. This means a lot to everyone in the company.”

Leading up to the bankruptcy, Canoo faced numerous challenges that compounded its financial instability. In the final months before the filing, the company furloughed its remaining employees and idled its factory in Oklahoma City. Despite having agreements to deliver electric vans to high-profile clients, Canoo struggled to ramp up production and secure broader market adoption. The company’s third-quarter financial reports revealed a persistent net loss, with a GAAP net loss of $112 million for the nine months ended Sept. 30, 2024, compared to $273 million in the same period in the previous year.

Executive departures and strategic pivots further aggravated operational struggles. In October, CFO Greg Ethridge and general counsel Hector Ruiz resigned, replaced by internal promotions. Under Aquila’s leadership, Canoo pivoted its focus from consumer sales to commercial fleets, which involved multiple shifts in production strategies and operational realignments. These changes increased operational costs and diminished investor confidence.

Financial mismanagement also played a role in Canoo’s demise. Regulatory filings indicated that the company borrowed substantial funds from Aquila’s financial firm, including a loan of approximately $1.2 million at an 11% interest rate and an additional $2.7 million later. These loans were secured by assets located at Canoo’s Oklahoma City facility, placing additional strain on the company. Furthermore, Canoo’s attempts to adhere to Nasdaq’s listing requirements through a reverse stock split were insufficient to reverse its financial trajectory.

The company’s liquidation process involves a bankruptcy trustee managing the sale of Canoo’s assets to repay creditors. Stakeholders, including employees, suppliers and investors, stand to receive proceeds from the asset liquidation based on their claims. Canoo’s decision to enter Chapter 7 reflects the company’s inability to restructure its debt and continue operations.

Canoo’s bankruptcy reflects broader trends and challenges within the EV industry. The market is witnessing a series of failures among startups, particularly those that went public through mergers with special purpose acquisition companies. Companies like Electric Last Mile Solutions, Fisker, Lordstown Motors, Proterra, Lion Electric have all faced struggles from bankruptcies to reorganizations in recent years. Arrival sold its assets to Canoo last March

For the EV startup ecosystem, where substantial capital is required to develop technology, scale production and achieve market penetration amid intense competition and high operational costs, volatility has been a recurring theme.

The liquidation of Canoo’s assets will likely have ripple effects across its supply chain and partnerships. Suppliers are already filing lawsuits over unpaid bills, with Kistler Instrument Corp. seeking $56,000 in damages. In Walmart’s case, the halt to operations is not expected to be an issue because the deal was a nonbinding agreement to purchase thousands of EVs.

The liquidation of Canoo may present opportunities for asset acquisition by other players in the EV market. Canoo had developed innovative technologies, including steer-by-wire systems and modular vehicle platforms, which could be valuable assets for competitors looking to enhance their technological capabilities.

The post Electric vehicle startup Canoo files for bankruptcy, ceases operations appeared first on FreightWaves.

Electric vehicle startup Canoo, once touted as a promising player in the EV market, has filed for bankruptcy and ceased operations. The company, known for its unique modular vehicle design and subscription-based model, struggled to gain traction in the competitive electric vehicle industry.

Despite raising millions in funding and generating buzz with its innovative approach to car ownership, Canoo faced challenges in scaling production and delivering on its promises. The bankruptcy filing marks a disappointing end for a company that had ambitious plans to disrupt the automotive industry.

As the EV market continues to evolve and grow increasingly crowded, Canoo’s downfall serves as a cautionary tale for other startups looking to make their mark in the electric vehicle space. It underscores the importance of solid execution, a sustainable business model, and the ability to navigate the challenges of bringing new technology to market.

While Canoo’s future remains uncertain, the company’s demise serves as a reminder of the risks and pitfalls that come with trying to revolutionize an industry as complex and competitive as the automotive sector. Time will tell what lessons can be learned from Canoo’s rise and fall, but for now, it’s clear that the road to success in the EV market is fraught with challenges.

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January 23, 2025
Is Canoo (GOEV) a Buy as Wall Street Analysts Look Optimistic?

Investors often turn to recommendations made by Wall Street analysts before making a Buy, Sell, or Hold decision about a stock. While media reports about rating changes by these brokerage-firm employed (or sell-side) analysts often affect a stock’s price, do they really matter?

Let’s take a look at what these Wall Street heavyweights have to say about Canoo Inc. (GOEV) before we discuss the reliability of brokerage recommendations and how to use them to your advantage.

Canoo currently has an average brokerage recommendation (ABR) of 1.86, on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by seven brokerage firms. An ABR of 1.86 approximates between Strong Buy and Buy.

Of the seven recommendations that derive the current ABR, four are Strong Buy, representing 57.1% of all recommendations.

Broker Rating Breakdown Chart for GOEV

Check price target & stock forecast for Canoo here>>>

While the ABR calls for buying Canoo, it may not be wise to make an investment decision solely based on this information. Several studies have shown limited to no success of brokerage recommendations in guiding investors to pick stocks with the best price increase potential.

Do you wonder why? As a result of the vested interest of brokerage firms in a stock they cover, their analysts tend to rate it with a strong positive bias. According to our research, brokerage firms assign five “Strong Buy” recommendations for every “Strong Sell” recommendation.

This means that the interests of these institutions are not always aligned with those of retail investors, giving little insight into the direction of a stock’s future price movement. It would therefore be best to use this information to validate your own analysis or a tool that has proven to be highly effective at predicting stock price movements.

Zacks Rank, our proprietary stock rating tool with an impressive externally audited track record, categorizes stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), and is an effective indicator of a stock’s price performance in the near future. Therefore, using the ABR to validate the Zacks Rank could be an efficient way of making a profitable investment decision.

Although both Zacks Rank and ABR are displayed in a range of 1-5, they are different measures altogether.

Broker recommendations are the sole basis for calculating the ABR, which is typically displayed in decimals (such as 1.28). The Zacks Rank, on the other hand, is a quantitative model designed to harness the power of earnings estimate revisions. It is displayed in whole numbers — 1 to 5.

It has been and continues to be the case that analysts employed by brokerage firms are overly optimistic with their recommendations. Because of their employers’ vested interests, these analysts issue more favorable ratings than their research would support, misguiding investors far more often than helping them.

In contrast, the Zacks Rank is driven by earnings estimate revisions. And near-term stock price movements are strongly correlated with trends in earnings estimate revisions, according to empirical research.

In addition, the different Zacks Rank grades are applied proportionately to all stocks for which brokerage analysts provide current-year earnings estimates. In other words, this tool always maintains a balance among its five ranks.

Another key difference between the ABR and Zacks Rank is freshness. The ABR is not necessarily up-to-date when you look at it. But, since brokerage analysts keep revising their earnings estimates to account for a company’s changing business trends, and their actions get reflected in the Zacks Rank quickly enough, it is always timely in indicating future price movements.

In terms of earnings estimate revisions for Canoo, the Zacks Consensus Estimate for the current year has increased 6.9% over the past month to -$47.53.

Analysts’ growing optimism over the company’s earnings prospects, as indicated by strong agreement among them in revising EPS estimates higher, could be a legitimate reason for the stock to soar in the near term.

The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #2 (Buy) for Canoo. You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here >>>>

Therefore, the Buy-equivalent ABR for Canoo may serve as a useful guide for investors.

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Canoo Inc. (GOEV) : Free Stock Analysis Report

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Zacks Investment Research

Canoo (GOEV) has been making waves in the electric vehicle (EV) industry, with its unique subscription-based model and innovative designs. As Wall Street analysts begin to take notice of the company’s potential, many are becoming increasingly optimistic about its future prospects.

Analysts at several major investment firms have recently issued positive ratings and price targets for Canoo, highlighting its disruptive business model and strong growth potential. Some analysts believe that Canoo’s subscription-based approach could revolutionize the way consumers think about car ownership, making it a compelling investment opportunity.

However, it is important for investors to exercise caution when considering buying shares of Canoo. Like many EV startups, the company faces significant challenges as it works to scale up production and establish itself in a competitive market. Additionally, the EV industry is highly volatile, and Canoo’s stock price could be subject to sharp fluctuations in the coming months.

Overall, while Wall Street analysts are generally optimistic about Canoo’s prospects, it is important for investors to do their own research and carefully consider the risks before making a decision to buy the stock. With that being said, Canoo’s innovative approach and potential for growth make it a stock worth keeping an eye on in the EV space.

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January 3, 2025

Tag: Canoo

Electric vehicle startup Canoo files for bankruptcy, ceases operations

Is Canoo (GOEV) a Buy as Wall Street Analysts Look Optimistic?