Canoo stock price sits at a record low as the company faces an uncertain future ahead. It was trading at $1.60 on Wednesday, a few points above its all-time low. It has crashed by over 99% from its all-time high as bankruptcy risks remains elevated. So, will GOEV complete the year, or will it collapse like Fisker and Lordstown?
Canoo faces major bankruptcy risks
Canoo is a troubled electric vehicle company that faces major survival risks. The odds of its business surviving through December this year are significantly low as it continues to run out of cash.
In December, the company announced that it was furloughing 82 workers and idling its plant in Oklahoma as it finalized new financing.
The challenge, however, is that the financing is not guaranteed. Also, the incoming Donald Trump administration will not be keen to providing loans to companies in the electric vehicle industry as Joe Biden did.
It is clear why Canoo furloughed staff and idled plants. The most recent results showed that Canoo’s balance sheet had just $1.53 million in cash and cash equivalents and $3.9 million in restricted cash.
These funds are not enough to fund a company that is not making substantial revenue and one that is losing millions of dollars a quarter. The last results showed that Canoo made just $891,000 in revenue in the third quarter and $1.49 million in the nine months of the year.
Canoo made a net profit of $3.25 million in the third quarter and a big net loss of over $112 million in the first nine months. That profit, however, was because of the gain on fair value in warrant and derivative liability.
Therefore, it is difficult to imagine how Canoo’s business will continue thriving now that it is burning cash and not making any substantial revenues.
Read more: Canoo stock price: Is GOEV a good contrarian buy?
The company’s biggest challenge is raising additional capital in this market environment. I believe that any potential lenders will be skeptical of extending cash to the company because of its substantial bankruptcy risks.
Additionally, Canoo requires millions or even over $1 billion to sustain its business in the long term. That’s because its cash burn will continue even when it starts manufacturing and selling its vehicles.
A good example of this is companies like Rivian and Lucid Group. Rivian, one of the biggest US EV companies, delivered over 51,500 vehicles in 2024, while Lucid sold 10,240 vehicles. Still, these companies continued to burn cash, generating billions of dollars in losses.
Therefore, we should expect Canoo to continue losing money in the next few years if it raises cash. This means that its bankruptcy risks are significantly high as we have seen with other companies in the EV industry like Fisker and Lordstown Motors.
Canoo stock price analysis
GOEV stock chart by TradingView
The daily chart shows that the GOEV share price has remained under pressure for a long time. It has dropped to $1.58, bringing its market cap to just $22 million.
Canoo has remained below all moving averages and invalidated the falling wedge pattern that was forming a few months ago. A falling wedge is one of the most popular bullish chart patterns in the market.
Therefore, the stock will likely continue falling this year as bankruptcy risks rise. However, it will likely have some occasional pumps now that it has become a penny stock.
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