After being told the state of Oklahoma would offer $100 million in incentives in August, EV maker Canoo has seen its stock plummet in price.
Trading closed at 26 cents a share on Friday as the car maker moved ahead with transforming a former plant in west Oklahoma City into a manufacturing plant. It is also in the midst of building an EV battery plant in Pryor. Canoo paid more than $34 million for the former Terex plant that sits along Interstate 40.
But what’s happened to Canoo shares, that a year ago traded at $1.38 a share? According to a report by financial group, Motley Fool, Canoo’s share prices dropped more than 75% in the past year and the explanation is, the company is bleeding cash. It needs more cash to fulfill the promises the made to the state of Oklahoma and the City of Oklahoma City in return for major tax incentives.
Canoo has an agreement with Oklahoma in which the state says it will purchase up to 1,000 Canoo electric vehicles as part of the incentive package for the operation in Pryor. The company already has a deal with Walmart in which Walmart will purchase at least 4,500 Canoo EVs. It also will provide Crew Transportation Vehicles for NASA’s crewed Artemis lunar exploration launches.
In its search for cash to finance its operations, Canoo announced in early October it made a deal with what it called a “leading high-tech advanced mobility company” for an investment of $45 million. The deal could also lead to one or more additional investments for up to $150 million, according to Canoo’s announcement.
Tony Aquila, Chairman, investor and CEO stated at the time the capital raised through the convertible preferred stock “supports Canoo’s mission and demonstrators our disciplined, milesteon driven approach to capital.”
So why aren’t investors buying Canoo shares and why are share prices plunging? As Motley Fool explained, investors rely on a company’s revenue and Canoo had zero revenue in the first half of this year. It reported no revenue in all of 2022.
“Basically, it isn’t selling anything at this point,” wrote Motley Fool.
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