Electric vehicle (EV) maker Canoo (NASDAQ:GOEV) just announced a 1-for-23 reverse stock split to be executed on March 8. The aim of the reverse split is to prevent a delisting by getting the price of GOEV stock over $1 per share.
This news sent shares tumbling overnight. Canoo stock opened at about 8 cents per share with a market capitalization below $100 million.
GOEV stock is now down more than 60% year-to-date (YTD) and more than 85% for the past 12 months.
Can Canoo?
As TipRanks reports, Canoo is either going through a “near-death experience” or is a “deep discount bargain.” While the company is testing an electric pick-up truck called the American Bulldog, its future seems to lie with more prosaic delivery vans.
Wedbush analyst Dan Ives remains bullish on GOEV stock. Ives has an “outperform” rating on shares, believing Canoo can be a “disruptive player” when it comes to the delivery van space.
Back in January, Ives noted that Canoo had $750 million in order commitments, including a large order from Walmart (NYSE:WMT), which has been expanding its delivery services.
Canoo came public in December 2020 through a special purpose acquisition company (SPAC), closing at around $19 per share on its first day of trading. But in its most recent 10-Q report, management admitted to “substantial doubt” about its “ability to continue as a going concern” unless it can obtain additional capital. The company reported just $8.2 million in cash and lost $111 million, or 18 cents per share, over the three months ended Sept. 30, 2023.
Since then, Canoo has received funding from the state of Oklahoma for which it has a delivery van contract. According to reports, the company has also recently received an order for six vans from the U.S. Postal Service.
What Happens Next?
Canoo will need cash to complete the orders it has on hand and prove its business model. It has been getting by on convertible debt, notes that can convert to stock. It had $37 million of current convertible notes outstanding in its November report and another $45 million of non-current convertibles.
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On the date of publication, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
