Canoo Stock Could Make Gains of 500%+

Electric vehicle (EV) maker Canoo Inc (NASDAQ:GOEV) has finally given its long-suffering shareholders something to cheer about. The company recently announced a deal to provide Walmart Inc (NYSE:WMT) with thousands of delivery vans.

Moreover, back in December, Canoo announced it had raised its annual EV production targets as follows:

• 2022: 3,000 to 6,000, up from previous guidance of 500 to 1,000
• 2023: 14,000 to 17,000, up from previous guidance of 15,000
• 2024: 40,000 to 50,000
• 2025: 70,000 to 80,000

(Source: “Canoo Increases Production Guidance and Targets for US Facilities,” Canoo Inc, December 15, 2021.)

“Canoo is now in a position to issue guidance at a time when many others in the industry are reducing targets and projections,” said Tony Aquila, Canoo Inc's chairman and CEO. "The Company has now refined its manufacturing strategy and assembled a team to execute the production roadmap for 2022 – 2025.” (Source: Ibid.)

Aquila also said in December that the company was shifting its manufacturing from Europe to the U.S.: “...we will be 100% built in the heartland of America, and we have proudly achieved another major milestone of having sourced 96% percent of our parts from U.S. and Allied Nations.”

Canoo Inc is well on its way to reaching its near-term targets, with more than 17,500 preorders, which have a projected total value of $750.0 million.

The company getting its EVs on the road would certainly be a blessing for GOEV stockholders, and the Walmart lifeline will definitely help. As of this writing, Canoo stock is:

• Up by 21% over the last month
• Down by 35% over the last three months
• Down by 56% year-to-date
• Down by 62% year-over-year

The big one-month rise is a result of the Walmart deal. That's a big move, but Wall Street analysts expect GOEV stock to generate even bigger gains.

Of the analysts providing a 12-month share-price target for Canoo stock, their average estimate is $15.00 and their high estimate is $20.00, for potential gains in the range of 354% to 506%.

Chart courtesy of StockCharts.com

About GOEV Stock

Canoo designs, engineers, develops, and manufactures EVs for commercial and consumer markets in the U.S.

The company's multi-purpose platform is a self-contained, fully functional rolling chassis that directly houses all of the critical components for the operation of an EV. (Source: “About Us,” Canoo Inc, last accessed July 15, 2022.)

The chassis includes the company's in-house-designed performance electric drivetrain, true steer-by-wire system, low-profile suspension systems, battery systems, advanced vehicle control electronics, software, and other critical components.

Canoo Inc's EV models include the "Lifestyle Vehicle" (launching in late 2022), the "Multi-Purpose Delivery Vehicle" (available for preorder), and the "Canoo Pickup" (launching as early as 2023).

The company has $300.0 million in total funding from an existing shareholder and an equity purchase agreement with financing partner Yorkville Advisors. (Source: “Canoo Inc. Announces First Quarter 2022 Results,” Canoo Inc, May 10, 2022.)

Canoo also has $600.0 million in accessible capital to optimize its financial needs to support the start of its EV production.

Walmart Inc to Buy at Least 4,500 EVs From Canoo Inc

On July 12, Canoo announced that Walmart agreed to purchase 4,500 of its EVs, beginning with the "Lifestyle Delivery Vehicle," with the option to purchase up to 10,000 units. (Source: “Walmart to Purchase 4,500 Canoo Electric Delivery Vehicles to be Used for Last Mile Deliveries in Support of Its Growing eCommerce Business,” Canoo Inc, July 12, 2022.)

The Lifestyle Delivery Vehicle is designed for high-frequency stop-and-go deliveries, and its interior is designed for small package deliveries. Therefore, it's perfect for Walmart’s growing e-commerce business. The EVs will help Walmart achieve its 2040 zero-emissions goals.

Canoo Inc expects to start producing Lifestyle Delivery Vehicles at the start of the fourth quarter and start delivering them sometime in 2023.

A caveat to the Walmart deal is that Canoo is barred from selling its EVs to Amazon.com, Inc. (NASDAQ:AMZN). Odd, perhaps, but not a big surprise. Amazon owns about 18% of Rivian Automotive Inc (NASDAQ:RIVN), with which it has placed orders for 100,000 electric delivery vans.

NASA Selects Canoo Inc to Transport Artemis Crew

In April, Canoo announced that it was selected by National Aeronautics and Space Administration (NASA) to provide crew transportation vehicles for Artemis-program lunar exploration launches. Canoo will deliver the customized EVs by June 2023. (Source: “NASA Contracts Canoo for Artemis Crew Transportation Vehicles – For First Human Lunar Landings in More Than 50 Years,” Canoo Inc, April 13, 2022.)

Artemis is the first human lunar landing program in more than 50 years. It's expected to be the longest-lasting space exploration program in history and lay the groundwork for visits to Mars.

While the number of crew transportation vehicles being ordered for the Artemis program isn’t massive, it’s great for Canoo's exposure, with the launches being viewed by billions of people over the duration of the program.

First-Quarter 2022 Results

In May, Canoo announced its financial results for the first quarter of 2022. As a start-up company, it hasn't been reporting any revenue; it's been burning through cash. For the first quarter, the company reported a net loss of $125.4 million. (Source: Canoo Inc, May 10, 2022, op. cit.)

Canoo had an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA loss of $117.0 million in the first quarter. It ended the quarter with cash and cash equivalents of $104.9 million.

In the first quarter of 2022, Canoo Inc had 17 Gamma vehicles on the road, completed its second year of deep winter testing of more than 2,000 miles, and produced battery modules for 43 Gamma vehicles—a 156% increase from the fourth quarter of 2021.

Since the end of the first quarter, the company more than doubled its Gamma builds since the end to 39 EVs.

Analyst Take

Canoo Inc is a start-up EV company that's on the verge of producing and selling its vehicles. Most significantly, it recently inked an agreement with Walmart to supply it with up to 10,000 EVs.

Canoo has also ramped up its production targets for 2022 and 2023. The company has plenty of cash to support the start of its production, which is slated for the fourth quarter of this year.

All of that makes Canoo stock worth keeping an eye on.