Written by Cláudio Afonso | LinkedIn | X
Electric vehicle startup Canoo, which filed for bankruptcy and ceased operations last week, disclosed in its filings that it owes $1.1 million to the investment bank Wedbush Securities. Ranking first in the list is the supplier and manufacturer Magna International with a total of over $7 million.
On its website, Wedbush says it was a “Strategic Advisor” to Canoo in December 2023, according to Wedbush’s investment banking website. Two months earlier, the firm has also provided the same service to the Vietnamese carmaker VinFast.
Daniel Ives, Wedbush’s Managing Director and Senior Equity Research Analyst since 2018, covers the EV sector as well as AI and technology, analyzing companies such as Tesla, Palantir, Apple, Nvidia, and others.
January 2024
A few months later, in January 2024—exactly a year ago—Ives initiated coverage on Canoo with an “Outperform” rating and a $4 price target. At the time, Canoo shares were trading at just $0.21, implying an upside potential of 1,804%.
In the research note, the Wedbush analyst wrote, “We believe that 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.”
The analyst added that “although in the infancy stages of its growth story,” the firm believed “it is important to keep an eye on this EV manufacturer chipping away at market share as this growth story unfolds.”
The share price spiked on the news but not for a long time.
Two months later, in March 2024, the company announced a 1-for-23 reverse stock split to regain compliance with Nasdaq and send its share price above the $1 threshold.
On April 3, and according to StreetInsider, Ives raised the firm’s price target on the EV stock to $5.00 from $4.00 while maintaining the Outperform rating.
August 2024
When Canoo reported its second-quarter financial results on August 14, the analyst participated in the call and started his intervention by praising Canoo’s performance between April and June 2024.
“Good job on the progress this quarter,” Ives stated before asking a question about the need for capital raise. On that day, the company reported a revenue of $605,000 and $20.7 million reduction in operating expenses versus the first quarter of the year.
“So could you just like — in terms of the capital raise, do you expect it’s going to be the same every quarter, given the needs, whatever the capital you’ll be able to raise and sort of that philosophy will continue for the next, at least few quarters?,” the analyst asked.
One month later, in September, the company withdrew its 2024 revenue guidance, along with projections for its manufacturing run rate, vehicle production, and deliveries for 2024 and beyond.
December 2024
Fast forward to December, the company executed another 1 for 20 reverse stock split while seeing its share price to continuously decline.
In the last 12 months, or nearly since Ives’ bullish price target on Canoo, the company’s shares lost 99% of their value. Even counting this Friday’s spike of 121% that the stock is having this Friday — as of the time of writing.
Canoo warned in mid-December that it was shutting down its factories in Oklahoma while working “to finalize securing the capital necessary to move forward with its operations.”
January 2025
Earlier this week, on the first trading session since Canoo filed for Chapter 7 bankruptcy last Friday, the stock plunged more than 75% to 25 cents on Tuesday’s pre-market trading session after the company filed for Chapter 7 bankruptcy last Friday.
As the Texas-based firm ceases operations, a bankruptcy trustee will oversee the liquidation of the company’s assets and the distribution of proceeds to creditors.
Over the last 12 months, the company missed its production targets, shared no updates on several of the partnerships it signed over the last few years, saw several executives (including co-founders) and saw suppliers filing lawsuits claiming non-payment.
In early November, the company said it had only $700,000 in cash and cash equivalents, followed by three rounds of 12-week-long furloughs affecting most of its staff.
Canoo reported third-quarter revenue of $900,000. Previously, Canoo had forecasted an annual revenue between $50 million and $100 million.
On November 7, Ives did not participate at Canoo’s third quarter earnings call.
Written by Cláudio Afonso | LinkedIn | X
