Canoo (NASDAQ: GOEV) stock price remained under intense pressure this week after the company published encouraging and optimistic financial results. It was trading at $2.65 on Wednesday, where it has been stuck at in the past few weeks. It has plunged by over 55% this year and by 80% in the past 12 months.
Canoo is optimistic but challenges remain
Canoo, an upcoming electric vehiclecompany, published its financial results that revealed steep losses. Its net loss jumped to $100.7 million in the first quarter, a big increase from $90.7 million in the same period in 2023.
On the positive side, its adjusted net loss improved to $57 million from $72 million a year earlier. The company also noted that it anticipates its total revenue will soar to $100 million this year as it starts delivering its vehicles to clients.
Another positive is that Canoo expects to continue saving cash, especially after receiving its Foreign Trade Zone (FTZ) designation in Oklahoma. It expects that the designation will save it over $70 million annually.
Canoo, unlike other EV companies, also has a substantial backlog of over $3 billion. $750 million of them are confirmed orders, a substantial figure for a company with a market cap of over $179 million. These orders are from commercial companies like Walmart, government agencies like USPS, and the military.
However, as I have written before, Canoo’s biggest challenge is that it is a cash-burning machine with a thin balance sheet, meaning that dilution will continue.
The company ended the quarter with just $18.2 million in cash, a small amount for a company losing millions of dollars each quarter. This means that Canoo will need to raise additional cash this year to survive.
Canoo has a long track record of diluting its investors. It raised $324 million in 2022 and $288 million in 2023. It has already raised $50 million this year and the trend will continue. That dilution has seen its outstanding shares rise to over 66.4 million, up from 20 million a year earlier.
Canoo capital raises
Canoo stock price forecast
Turning to the daily chart, we see that the GOEV share price has moved sideways in the past few days. It has remained below the crucial level of $3. The stock has also formed a symmetrical triangle pattern, which is nearing its confluence level.
Canoo has remained slightly below the 50-exponential Moving Average while the Average True Range (ATR) has tumbled. Therefore, the outlook for the stock is still bearish, with the next point to watch being at $1.22, its lowest swing on May 14th.Shorting Canoo is significantly risky now that meme stocks like GameStop, AMC,and Blackberry have surged recently. As such, there is a possibility that it will go through a short squeeze soon as investors buy the dip.
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