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At This Point, Buy and Hold Canoo Stock or Keep Clear Until It’s Stable

A company that has gone public via the SPAC boom of 2020, Canoo Inc. (NASDAQ:GOEV) has enticed investors looking for growth in the burgeoning EV sector. Fact is, GOEV stock has only been publicly traded for a few months (since the end of December) but has garnered a lot of attention recently as a potential domestic alternative (or complementary company) to Tesla Inc. (NASDAQ:TSLA).

Depth of field shot of an electric vehicle being charged.

Source: Shutterstock

This has been a highly volatile stock, with Canoo’s share price trading below the $10 level and above the $20 level in wild swings. Currently trading around the $17 level, investors are wondering if this is a company that can garner the same type of attention as its EV counterparts.

Here’s where I think Canoo could make inroads for such investors.

A Closer Look at GOEV Stock

Canoo’s product design is a radical turn from what most car buyers have seen in the past. Indeed, this is a company that has turned what a car “ought” to look like completely on its head.

The company’s futuristic designs are aimed at providing function over form. The product offering currently covers a lifestyle model (similar to a van, seats 7), a B2B delivery model (again, a van) and a sports vehicle model.

Each of these vehicles has a range of more than 200 miles. Additionally, the initial specs look appealing from a competitive standpoint with what’s in the market now.

The company has partnered with Hyundai Motor Company (OTC:HYMTF) to co-develop the all-electric platform for its vehicles. Thus, Canoo has some pretty impressive backing and appears to have the potential to deliver on its promises.

Whether or not Canoo’s product designs are something that will catch on remains to be seen. However, innovation often requires a shift in consumer thinking.

Fully Autonomous Compatible

Canoo’s most recent investor presentation highlights a key competitive advantage Canoo is looking to build. The company’s focus on providing 2.5 level autonomy by 2022 is likely to be appealing to Canoo’s target market.

As regulations continue to change, Canoo is looking to be at the forefront of autonomous driving.

Indeed, there’s a massive potential market for delivery vehicles and lifestyle vehicles long-term. In this way, Canoo appears to be looking to compete head-on with rivals such as Tesla.

However, when one considers the subscription model proposed by Canoo, there may be a different market altogether this company is targeting.

Subscription Model Attractive for GOEV Stock

Innovation with this company doesn’t end with product design. One of the key differentiating factors for Canoo is its proposed subscription model for its customers.

The company makes one thing very clear in its communications: It’s not a ride-sharing or car-swapping model. Rather, the idea is to provide a simple, all-encompassing monthly fee for its customers. The fee would cover insurance (Canoo will take care of all the details), charging, and maintenance. Thus, Canoo is ingeniously looking to remove the headache portion of owning a vehicle.

In practicality, how this model will play out remains uncertain. Whether or not other car companies pick up on this model also remains to be seen.

However, I like the innovation Canoo has brought to the table in terms of thinking about the car-buying experience we all so dread.

In January, it was leaked that discussions were happening between Canoo and Apple Inc. (NASDAQ:AAPL) on a potential partnership. Apple appears to be looking for a suitor in the EV space and has been in discussions with a number of companies for some time.

The fact that GOEV stock was brought up has encouraged speculators and EV investors alike to take a look at this company.

It appears Apple is still looking for a strategic means of entering this business, and I think it remains highly unlikely any sort of partnership deal will come to fruition between these two players. However, the fact that Apple has looked at Canoo so early on is encouraging to EV growth investors.

The Bottom Line on Canoo Stock

This is still a highly speculative stock with no revenues to speak of at the moment. Investors are buying a business model that has not come to fruition as of yet.

Accordingly, I’d caution investors to either buy this stock and hold it for the long-term, or stay away right now. These volatile stock price moves are not conducive to a conservative investor looking to park cash someplace.

That said, I do think this is a very interesting EV option for investors who believe Tesla’s stock price has run too far too fast. I also think this is a company that brings a ton of innovation to the table with its intriguing business model and product design.

Disclosure: On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article.

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