-Written by Fernando-
Canoo has been known as one of the EV competitors to companies like Tesla ($TSLA) and Lucid ($LCID) , and have been looked at as a bad prospect due to their recent financial troubles after their first-quarter reports. The company’s struggles with money have been reflected on their shares and how fast they have been dropping within 1 year. However, with recent news of contracts with Walmart ($WMT) and a possible contract with the US Army, $GOEV is looking to make a strong comeback. So, is it still smart to invest now?
After a steady fall this past year, the news of the Walmart deal jumped the stock up to almost double its price. While this news is great for the company we have to see how the contracts can actually help the company grow. Here are some interesting points to take into account when talking about their contract with Walmart:
- Walmart ($WMT) ordered 4,500 electric vans from Canoo with an added option for 10,000 more. However, during this process Walmart now owns about 20% of the company.
- Any type of relationship to Walmart’s biggest competitor, Amazon ($AMZN), is not allowed.
- Walmart has the option to buy more than 61 million shares of Canoo stock at a price of $2.15.
- Canoo will not be the exclusive provider of electric vehicles to Walmart. While Walmart has already purchased EVs from GM and Ford.
Now as for the US Army deal it is not so clear that they will be the main provider for them as well. The US Army is currently in an evaluation phase with Canoo to see if it would be a good matchup for them. NASA is another that Canoo is partnering with to provide an electric vehicle platform. This is huge for the once struggling EV competitor! If Canoo can land a big contract with these [and/or more] government agencies and departments, that means great financial support to produce vehicles and a better chance to compete with retail dealers.
Now, regardless of the past struggles with financing that $GOEV has gone through, their aim to be a commercial dealer is a really great lifeline for them. As Walmart continues to try and get a step ahead of Amazon in the online shopping industry, Canoo would be a great beneficiary in that situation. As the government agencies and military try to find an electric provider for vehicles Canoo would be in a great position to grow. For these reasons I would expect their stock to continue growing so for that reason I find $GOEV as a very attractive stock to buy, but of course do your own DD before making any investment decisions.