Canoo's stock sinks toward a record low, even as Wedbush sees 1,800% rally potential
By Tomi Kilgore
Analyst Dan Ives starts coverage of EV maker at outperform, given its position to be a 'disruptive' player in delivery-van market
Shares of Canoo Inc. continued dropping into record-low territory Friday, even after Wedbush analyst Dan Ives recommended investing in the electric-vehicle maker, which he says has a "golden opportunity" to benefit in the current last-mile delivery market.
With current partners such as Walmart Inc. (WMT), an order book of more than $3 billion, and over $750 million in committed orders, which effectively sells out production until fiscal 2025, "we believe Canoo has strong momentum to become a disruptive player in the Class 1 vehicle market," Ives wrote in a note to clients. Class 1 vehicles include the delivery vans that Canoo makes.
Ives initiated coverage of Canoo's stock (GOEV) with an outperform rating. His 12-month price target of $4 implies 1,788% upside from current levels in the next year.
The stock slumped 0.7% in midday trading Friday, after closing Thursday at a record low of 21.3 cents. The stock's decline reversed an earlier gain of as much as 12%. The stock has closed below the $1 level since Feb. 9, 2023.
Canoo became a public company on Dec. 21, 2020, after completing a merger with special-purpose acquisition company Hennessy Capital Acquisition Corp. IV. Canoo's stock closed at $18.89 on Dec. 22, 2020, its first day of trading.
"Although in the infancy stages of its growth story, we believe it is important to keep an eye on this EV manufacturer chipping away at market share as this growth story unfolds," Ives wrote.
Ives said the last-mile delivery transportation market is expected to reach about $425 billion by 2030 in the U.S. alone, with compounded annual growth in the 35% range through 2040 as EV demand keeps growing.
"We believe the current climate is favorable for Canoo at this point, as we are in the early innings of this $5 trillion market EV opportunity over the next decade, with the auto industry ... going through one of the biggest transformations not seen since the 1950s," Ives wrote.
Despite Ives's bullishness, buyers should beware. The company has included warnings that it "has identified substantial doubt about our ability to continue as a going concern" in every audited quarterly and annual filing since the first quarter of 2022.
"If we are unable to obtain sufficient additional funding or do not have access to additional capital, we will be unable to execute our business plans and could be required to terminate or significantly curtail our operations," the company said in the 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ending Sept. 30, 2023.
Canoo's stock has plummeted 82% over the past 12 months, while the Global X Autonomous & Electric Vehicles exchange-traded fund DRIV has rallied 17% and the S&P 500 index SPX has advanced 23.3%.
-Tomi Kilgore
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
01-05-24 1258ET
Copyright (c) 2024 Dow Jones & Company, Inc.-
What’s Happening in the Markets This Week
-
Worst-Performing Stock ETFs of the Quarter
-
Q3 in Review and Q4 2024 Market Outlook
-
Top-Performing Stock ETFs of the Quarter
-
September Jobs Report Forecasts Show Moderate Hiring Gains
-
Port Strike a Headache for Shippers but a Potential Tailwind for Certain US Transport Stocks
-
13 Charts on Q3′s Roller-Coaster Rally for Stocks and Bonds
-
5 Stocks to Buy Instead of Overpriced US Equities
-
Consumer Defensives: Despite Angst, Thirsty Investors Have Names to Pursue
-
Industrials: Many Stocks Overvalued After Q3 Outperformance
-
Basic Materials: Despite Index Rise, We See Multiple Long-Term Opportunities
-
What the Election Could Mean for Big Tech Stocks
-
3 Lessons From Recent Stock Market Drama
-
Consumer Cyclicals: Even Amid Moderating Consumer Spending, We See Discounts
-
Healthcare: Valuations Look Fair Overall, With Select Industries Still Undervalued
-
Utilities: Falling Interest Rates, Growth Outlook Boosting Stocks