Canoo Stock Has Serious Risks Well Beyond Its Bold Aesthetics


In what seemed like an approach toward a catastrophic year in 2020 was instead a banner moment for electric vehicles. It didn’t seem exactly intuitive at the time, but publicly traded EV manufacturers watched their valuations soar. Thus, in this context, it’s not surprising that one of the hot names of the day is Canoo (NASDAQ:GOEV). It’s even got one of the cleverest ticker symbols, GOEV stock.

A Canoo MPDV being loaded with small shipping containers

Source: Canoo media

Canoo isn’t built on hype alone, far from it. First and foremost, the novel coronavirus pandemic demonstrated the dependency problem of combustion-engine vehicles.

Everyone knows that owning a regular car is a pain in the rear. Beyond pumping gasoline, you’ve got to change the oil, change other fluids and go through scheduled maintenance. It adds up. But most importantly, you need other people to do the work.

Yes, technically, you can do your own maintenance, but with everything crammed into a small space in modern cars, it’s a bit of a pain.

That’s the problem – most folks need to visit their dealership or mechanic for maintenance purposes. That added potential contact risk during the pandemic, which fundamentally benefits the case for GOEV stock and other related investments. EVs simply have fewer moving parts, requiring less maintenance all things being equal.

The other catalyst boosting GOEV stock is shifting demographics. Multiple surveys reveal that millennials and Generation Z are the most willing demographics to pay for sustainable products. Over the trailing year, we’ve witnessed how young people are investing their money differently from prior generations, to put it mildly. Of course, it makes sense that their platform of transportation will change as well.

Plus, you have Canoo’s subscription model, where consumers are not encumbered with long-term contracts. Instead, they basically pay as they go.

Some Questions to Ask Before Buying GOEV Stock

Though GOEV stock has much going for it, it’s not without some concerns. From a qualitative perspective, one of the biggest is the looks. Admittedly, it is a striking design. Whether it’s strikingly good or bad is another topic altogether.

I’m not going to pretend that I’m an expert in automotive design and consumer tastes. However, there’s a real risk in coloring outside the lines in this industry. Mostly, that’s because you’re dealing with expensive products. If a vehicle doesn’t resonate with the consumer, it’s back to the drawing board.

To be fair, Canoo uses an innovative skateboard platform, which means that the company can put any exterior chassis atop it. For now, it’s going with the toaster-on-wheels look. However, it has plans to develop other vehicle categories, such as pickup trucks, delivery vans and even a sports car.

Still, if I’m being honest, none of these formats are particularly attractive due to their almost symmetrical side profiles (aside from the pickup truck). For instance, with Canoo’s flagship microbus, it’s hard to tell which end is the front and which one’s the rear. Don’t get me wrong – it’s interesting but that kind of novelty can wear off. And that would be a problem for GOEV stock.

Setting that issue aside for now, the bigger concern that I have for GOEV stock is this trailing year giveth and it taketh away. At the beginning of the coronavirus pandemic, many drivers valued the relatively headache-free ownership of EVs, especially when contactless transactions came at a premium.

Today, that narrative has changed because of the Texas winter storm. When the power grid went out, it devastated many regions of the Lone Star State. Logically, this meant that if your transportation was tied to the grid (as EVs are), you were stuck until things went back to normal.

After what we’ve all been through, such dependency is a scary thought.

Price Action Is All Over the Map

The other factor that’s making me hesitant toward GOEV stock is the price action. It’s been very choppy, which doesn’t inspire confidence because other, more established EV stocks have also worryingly printed red ink.

If Canoo’s subscription model is designed to attract regular, everyday customers, the investment community is apparently not holistically convinced.

Further, we have a long way to go before the economy improves for everyone. Essentially, this remains a very tense and difficult time for many Americans. It just doesn’t seem the timing is right for people to make a switch to a different automotive platform. For this and other reasons, I’m going to wait out GOEV stock on the sidelines.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.

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