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Canoo (GOEV) shares slip after $52.5 million discounted stock sale

EV maker Canoo (GOEV) is raising cash again after running low on funds as it works to reach full production. However, as evident by Canoo’s falling stock price this morning, investors are not thrilled with the deal.

Canoo (GOEV) stock falls on stock sale

Since its foundation in 2017, it hasn’t been all sunshine and rainbows for young EV maker Canoo.

After posting an over $125 million net loss in the first quarter of 2022 and another $164 million loss in Q2, Canoo expressed substantial doubt it would be able to continue operations.

Its luck turned shortly after, partnering with major retailers and other organizations, like NASA and the US Army, and like Walmart for a supply agreement for up to 10,000 Lifestyle Delivery Vehicles (LDVs).

Meanwhile, Canoo’s financial woes have continued. Despite implementing several cost control measures throughout 2022, producing a low volume of EVs (or any vehicle) while trying to ramp production is a costly activity.

Despite reducing cash burn by 25% and securing additional sources of funding, Canoo said it was still running low on cash in November, mentioning it may need to raise funds by selling new stock.

Canoo Lifestyle Vehicle (Source: Canoo)

With this in mind, Canoo said in a press release today it has entered into definitive agreements with certain (undisclosed) institutional investors for the purchase and sale of 50,000,000 shares of Canoo common stock together with warrants.

The investors can purchase the shares for a price of $1.05 per share and can exercise the accompanying warrant for $1.30 per share.

Canoo will bring in approximately $52.5 million in gross proceeds, using it for “general working purposes.” The EV maker is set to receive $1 million in incentives if it creates the 500 or more high-paying jobs it intends to at its Oklahoma City manufacturing plant.

GOEV stock is down over 10% today as investors digest the news, while Canoo shares are down over 80% in the past year.

Electrek’s Take

On the one hand, Canoo continues to free up funds as it works to reach full production capacity. The EV maker is creating an IP library with over 200 patents total while building out its domestic manufacturing footprint. In addition, Canoo looks to benefit from the Inflation Reduction Act, with 92% of its platform sourced from the US or allied nations.

But, and this is a big but, current investors can see significant dilution (again), hence the drop in stock price, with the potential for up to 100 million new shares.

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Avatar for Peter Johnson Peter Johnson

Peter Johnson is covering the auto industry’s step-by-step transformation to electric vehicles. He is an experienced investor, financial writer, and EV enthusiast. His enthusiasm for electric vehicles, primarily Tesla, is a significant reason he pursued a career in investments. If he isn’t telling you about his latest 10K findings, you can find him enjoying the outdoors or exercising