Canoo (NASDAQ:GOEV) stock hasn’t performed as expected.
After mid-November’s news that it was setting up shop in Arkansas and Oklahoma and the upward revisions in its production guidance for 2022 and beyond in mid-December, you would think all of this would send GOEV stock flying higher.
That’s simply not the case. Since the same-day news releases about Arkansas and Oklahoma on Nov. 15, Canoo’s share price briefly jumped to near $13 before falling back to single digits in December.
Down 30% in the final month of the year, the company’s Made in America business plan doesn’t seem to be winning over investors.
GOEV Stock and the Commercial Market
I haven’t written about Canoo since March.
At the time, I felt as though it had a chance of success because two of its three future electric vehicles (EVs) would be for commercial use.
“I continue to believe that EV manufacturers, especially startups that focus their energy on the commercial side of things in the near term, ought to do better financially in the long run,” I wrote on March 15.
“So, the fact two out of three of the company’s vehicles are commercial in nature suggests that the risk profile isn’t quite as high as it would be was it trying to convince only consumers to buy its products.”
There’s no question the company’s prototypes are ugly vehicles. However, once actual production units start rolling off the assembly line in Arkansas later in 2022, I have no doubt the company will deliver more attractive vehicles.
But make no mistake about it. Canoo’s success will come from its vehicles providing loads of utility for its customers.
As part of its December production guidance, the company stated that it will begin production in Arkansas in 2022 and bring its Mega Micro factory in Oklahoma online in late 2023.
As a result, it expects to produce 4,500 EVs in 2022 at the midpoint of its guidance, up from 750 previously.
In 2024, once both U.S. factories are humming along, Canoo projects 45,000 units, rising to 75,000 a year later.
The vehicles will be 100% Made in America, and 96% of the parts will be sourced from the U.S. and other allied nations such as Canada and Mexico. But, for now, it plans to focus its sales on the U.S. market.
I think that’s a smart move. It allows Canoo to keep closer tabs on its vehicle production, sales, and intellectual property. It can always figure out a European production plan should America prove successful.
It’s Definitely Not Suited to a Retirement Plan
In March, I thought GOEV was a fun-money play below $15. However, I did not believe it was a sure bet.
Now that it’s fallen by almost 50%, I can say with certainty that you should only be investing in GOEV stock if you can afford to lose 100% of your investment.
It is not a stock for your retirement account. Not by a long shot.
CEO Tony Aquila continues to make changes in its senior management. The Verge discussed this subject in a December article suggesting that the company’s shift to commercial vehicles has necessitated changing the guard.
However, it will take at least six months into 2022 before determining if Aquila’s moves will pay dividends for shareholders.
Aquila’s got a considerable amount to gain or lose from Canoo. He would prefer the former rather than the latter.
However, I think even Aquila would agree a bet on GOEV stock is not a sure thing.
The Bottom Line
In mid-December, InvestorPlace’s Muslim Farooque argued that Canoo has a “spectacular value proposition and multiple growth catalysts.”
As a result, he believes that GOEV stock is an excellent long-term buy.
I believe that with Tony Aquila’s strong understanding of technology combined with significant skin in the game, he won’t leave any stones unturned when delivering long-term shareholder returns.
That said, do not invest in Canoo if you can’t afford to lose 100% of your investment. Canoo is an excellent long-term speculative buy.
On the date of publication, Will Ashworth 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.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.