Written by Cláudio Afonso | LinkedIn | X
Stifel analyst Stephen Gengaro downgraded the firm’s rating on Canoo shares from “Buy” to “Hold” and slashed the price target by 89%, from $4.50 to $0.50.
Canoo shares fell 11% on Monday, closing at $1.37. The company, which has not commenced mass production of its commercial EV trucks and vans, reported a market capitalization of just under $7 million, the lowest in its history.
“In this installment of ’30 Stocks in 30 Days’, we are downgrading Canoo to Hold from Buy,” the analyst wrote before justifying the downgrade.
“We had maintained our Buy to reflect GOEV’s in-house technology and, albeit with high risk, we had expectations for commercial deliveries to commence,” Gengaro wrote in a new research note published late Monday.
Citing the recently announced production suspension and the financial condition, Gengaro slashed the firm’s price target on the stock. On December 19, the Texas-headquartered company said the latest round of furloughs affected “both salaried and hourly” workers, adding that it is “idling its factories in Oklahoma while it works to finalize securing the capital necessary to move forward with its operations.”
“Given GOEV’s need for capital and its recent announcement that it is suspending production in Oklahoma, we are downgrading the shares and cutting our target price to $0.50,” Gengaro wrote.
The analyst says the stock is in their ‘Butch Huskey’ after failing to succeed despite the order book of “more than $2 billion” announced two years ago.
“GOEV is in our ‘Butch Huskey’ category, a Mets player in the early-to-mid 90s who had early signs of success but arguably was not prepared for prime time when he was promoted to the majors at a young age,” Stifel analyst wrote.
Over the weekend, the auction organizer BidItup announced that Canoo will be selling engineering and manufacturing equipment via webcast on January 24.
A former Canoo employee told EV last week that the company’s manufacturing partner, Zion, locked the robots on the main production line out of operation last October due to non-payment.
The company has recently executed a second reverse stock split this year aiming to comply with Nasdaq’s listing requirements. Thanks to the reverse stock split, Canoo’s shares are now trading above Nasdaq’s $1 minimum bid price threshold, a critical requirement to continue listing.
Written by Cláudio Afonso | LinkedIn | X
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