When the 87 workers at the Canoo electric vehicle manufacturing plant in Oklahoma City got the word they were furloughed for 12 weeks in late December, it came a day after Canoo took a financial step to increase the value of shares in the struggling company.
After weeks of declining stock value, Canoo made the move on December 19 and carried out a reverse stock split in which multiple shares of stock were combined into fewer shares, a move that is designed to not only increase the price of each remaining share but also to avoid any possible delisting from the stock exchange. Some analysts consider such a move a “negative” sign because it indicates a company is struggling financially and is trying to artificially increase its share price by the reduction of the number of outstanding shares.
Canoo’s reverse stock split was a “1-for-20” split of the company’s common stock, par value $10.0001 per share. The split became effective the morning of Christmas Eve or Dec. 24, 2024. As a result, every 20 shares of common stock issued and outstanding were automatically combined into one share of common stock. Canoo’s filing with the Securities and Exchange Commission indicated that the company, as of Dec. 18, 2024, had 289,720,778 shares issued and outstanding.
Canoo’s common stock is still traded on The Nasdaq Capital Market under the symbol “GOEV” while its publicly traded warrants are traded under the symbol “GOEVW.”
“Accordingly, for the Company’s warrants trading under the symbol “GOEVW”, every 20 warrants will be exercisable for one share of Common Stock at an exercise price of $5,290.00 per share of Common Stock,” according to the SEC filing.
On Thursday, Canoo stock dropped 7 cents or 5.22% to close the trading day at $1.27 per share.
The reverse stock split wasn’t the only financial move by Canoo in recent weeks. In early November, Canoo entered into a Revolving Credit Facility Agreement and related Security Agreement for up to $12 million with AFV Management Advisors, LLC, an entity affiliated with Tony Aquila, Canoo’s CEO and Executive Chair.
The day before the reverse stock split filing with the SEC, an in consideration of a discretionary advance of $2.5 million under the Secured WC Facility, Canoo and AFV agreed to amend the collateral package “to include substantially all of the assets at the Company’s Pryor, OK location as collateral for the facility.”
Canoo admits its financial struggles have been difficult and stated so in the SEC filing.
“While we are in active discussions regarding additional financing, these or other furloughs could have unintended consequences, and if we are unsuccessful in obtaining additional funds on commercially reasonable terms or at all, we likely be unable to satisfy our obligations and may become subject to further litigation or insolvency proceedings.”
Meanwhile, the Oklahoma City EV manufacturing plant is closed and so is Canoo’s battery facility in Pryor. In addition to the 87 workers put on furlough for 12 weeks in Oklahoma, 13 employees at other facilities were also idled. If Canoo reopens the two facilities as promised, it will be sometime in March.
“These actions are part of the Company’s previously disclosed and ongoing efforts to reduce costs and conserve cash resources while focusing on core operations and capital raising.”
