The brand name Canoo (NASDAQ:GOEV) might sound funny, and the company’s electric vehicles certainly don’t look “normal.” But if you’re okay with an automaker that’s off the beaten path, then you’ll definitely want to check out GOEV stock.
Not only are the vehicles themselves unusual, but Canoo’s subscription-based business model might take you by surprise. However, an argument can be made that this way of doing business will provide strong ongoing revenues.
You can probably already tell that GOEV stock really isn’t meant for closed-minded or extremely traditional investors. But then, folks who are willing to dive into electric-vehicle, post-SPAC stocks, are typically willing to accept some risk.
Another consideration is the price of GOEV stock, which experienced a substantial bounce in early January. So, does this mean that it’s too late to capture gains in this fascinating EV stock?
A Closer Look at GOEV Stock
Don’t expect GOEV stock to have a lot of history, as it’s a new stock that just started trading on Dec. 22. However, we can track the price action further back than that, albeit under a different stock ticker symbol.
Previously, there was a shell company known as Hennessy Capital, which traded on the NASDAQ Exchange under the ticker symbol HCAC.
Today HCAC stock is gone as the special purpose acquisition company (SPAC) deal was completed, so now we can trade GOEV stock. Yet GEOV didn’t get off to a great start: from Dec. 22 to Dec. 31, the stock dropped from $21 to less than $14.
On Jan. 4, I got lucky and recommended buying GOEV stock at its exact short-term bottom, which was around $12.50. By the morning of Jan. 12, the share price had risen to $16.52.
Still, this doesn’t mean that you’ve completely missed the opportunity to profit from GOEV stock. After all, it’s been as high as $24.90, and could get there again.
Carving Its Own Path
To steal a well-written phrase from InvestorPlace contributor Vince Martin, Los Angeles-based Canoo “is trying to carve its own path.”
That’s a great way of phrasing the bullish argument in favor of GOEV stock over other electric-vehicle stocks. Just the name of the company should tell you that it is a truly non-conformist automaker.
Canoo doesn’t expect to launch its first consumer model until 2022, so we’ll probably have to wait awhile to see the company’s vehicles on the roads.
But if you check out Canoo’s investor deck, you’ll see vehicles that look like they belong in a science-fiction movie. For consumers and for prospective investors, these vehicles belong in the “love them or hate them” category.
Just as importantly, Canoo’s vehicles offer “the flattest and lowest profile skateboard in the industry that enables a variety of vehicle configurations.”
A Different Business Model
To borrow from Martin again (as he undoubtedly understands car parts more than I ever will), Canoo’s skateboard is “a unique, proprietary chassis with an extremely low profile” which “allows for customized, modular vehicles with more space than their traditional counterparts.”
Thus, Canoo’s vehicles are different, inside and out. The same can be said about the company’s business model, as Canoo doesn’t sell its vehicles outright.
Rather, Canoo has a subscription-based model. In the investor presentation, the company describes it as a “No commitment subscription program that includes a vehicle and other services bundled into a single monthly payment.”
Under that description, Canoo estimates that its subscription-based business model will generate a compound annual growth rate (CAGR) of 147% from 2022 to 2025.
That’s a tremendous return on investment compared to the traditional, one-time-sale business model. Only time will tell whether a 147% CAGR is realistic, but it sure sounds enticing.
The Bottom Line
Some investors might insist on a conventional business model and traditional-looking cars. If that describes you, then GOEV stock probably isn’t right for you.
Or maybe you’re willing to take a chance on something novel and non-conformist. If that’s true, then you might be willing to say, “Can do!” to Canoo.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.
