Shares of budding electric vehicle company Canoo (NASDAQ:GOEV) posted robust gains in the past few months.
GOEV stock enjoyed a healthy run-up in November after announcing some key milestones in releasing its lifestyle vehicle during the second half of 2022.
With its eye-catching designs, multi-purpose platform and attractive valuation GOEV is arguably one of the most exciting EV plays in the market.
GOEV stock’s first year of trading has been a struggle. The stock has returned a negative 57% in the past year and trades slightly below its $10 SPAC pricing at this time.
Given how frothy the EV market has been, the stock’s performance isn’t a big negative at this point. GOEV stock trades at a highly enticing price to book ratio of 4.8 times which is much lower than its peers.
As we get closer to the launch of its first vehicle, GOEV stock may take off. With that being said, let’s dive into the Canoo story to see what makes it a fascinating EV play.
Canoo reported several positive developments during the third quarter. First up, it has chosen Oklahoma as the place where it will establish its manufacturing facilities.
The facility will have software, R&D, and a customer support center. Additionally, it is looking to build an industrialization facility in Arkansas. On top of that, it will be receiving $100 million in incentives from the states, as mentioned above.
Moreover, the company also wrapped up parts sourcing for the pre-production of its lifestyle vehicle, which is expected to launch next year. A commercial van from the company will also follow in 2023.
Canoo has achieved roughly 500,000 miles of Beta testing since it entered the gamma development phase. In October, it reached an agreement with Panasonic in supplying batteries for its lifestyle vehicle.
A Closer Look at GOEV Stock
Canoo differs from other EV companies as the result of its approach, technology and multi-purpose platform. It plans to enter the EV fray with a minivan or SUV, which tends to be the most profitable automotive segment.
Moreover, it has a multi-purpose platform, enabling it to develop new vehicle models cost-effectively and efficiently. The platform’s re-usability enables the company to save labor and other related costs.
The third element is that the company plans to focus on providing critical software and accessories across the life cycle of its vehicles. Add in the number of catalysts on the near horizon; Canoo has a spectacular growth runway ahead.
With an EV company such as Canoo, you have plenty of risks that you need to be wary of. There’s always the risk of customer acceptance with a new entrant like Canoo. Hence, there is no assurance of financial success unless we have information about pre-orders to gauge customer interest.
Moreover, the development of its new manufacturing facility may significantly delay deliveries and capital increase expenditures.
Additionally, Canoo’s outsourcing partner, VDL Nedcar, experienced a cyber-security attack in October. Canoo currently doesn’t have any debt burden, but that metric needs to be monitored as it ramps up R&D spending as we go forward.
Through September, the capital expenditures amounted to $100.1 million on a year-to-date basis. After the third quarter, the company still had $414.9 million in cash equivalents.
Bottom Line on GOEV Stock
Canoo faces risks, including stiff competition from the top dogs of the EV sector. However, it has boasted an incredible value proposition that helps it focus on multiple revenue streams, foster growth, and increase profitability.
Its management team is resilient and is focused on the development path. GOEV stock price is likely to soar once it delivers its vehicles on time.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.