Canoo’s first-quarter earnings showed a company burning through cash with no short-term revenue and warned it may not have enough money to stay in business.
Shares of Canoo, which fell 5% on Tuesday, fell another 17.5% in after-hours trading after the earnings report. It has since recovered and is now down more than 11%.
Canoo has a turbulent and short history. The company’s car designs, which debuted in the spring of 2019, have won accolades and made it a red-hot electric vehicle startup. Just last month, Canoo was even selected by NASA to build a ground crew transport vehicle for the Artemis space exploration program.
But Canoo has also suffered from a string of problems and controversies, including internal drama, the exit of a co-founder, legal issues, SEC investigation and production delays.
This latest earnings report paints an increasingly grim picture for Canoo’s future.
The electric car startup, earlier this week filed a lawsuit against one of its major investors The quarter ended with $104.9 million in cash and cash equivalents to recover a $61 million profit from an alleged suspicious stock transaction. That means the company currently has no revenue and has burned through roughly $120 million since the fourth quarter.
Canoo’s net loss reached $125.4 million, compared to $15.2 million in the year-ago period, and total net cash used in operating activities was $120.3 million, compared to $53.9 million in the first quarter of 2021.
“Our business plan requires a lot of money,” said one Regulatory filing from Kanu. “If we are unable to obtain sufficient or no funds, we will not be able to execute our business plan and may be required to terminate or substantially reduce our business, and our prospects, financial condition and results of operations could be materially and adversely affected .”
Canoo announced an agreement in August 2020 Merger with special purpose acquisition company Hennessy Capital Acquisition Corp., with a market cap of $2.4 billion. At the time, Canoo said it was able to raise $300 million in private investment in public equity, or PIPE, including investments from funds and accounts managed by BlackRock.
PIPE investment does not appear to have materialized yet. Canoo said on a conference call with investors on Tuesday that it expects to close a $300 million public equity (PIPE) private investment related to the merger this week, and the company has submitted a $300 million generic shelf. Tony Aquila, Canoo’s chief executive, said the $600 million was necessary to start production.
Despite the imminent arrival of the money, Canoo issued a “going concern” warning.
Going concern means that the company may not have sufficient funds or generate sufficient revenue to meet its obligations as they fall due. Among other looming production deadlines, including more than 17,500 pre-orders, Canoo said It will provide NASA with a variety of custom models through June 2023, which will be based on its lifestyle vehicle models. Canoo’s financial concerns have called into question the EV maker’s ability to deliver on that promise.
NASA did not immediately respond to a request for more information.
When an investor asked about production guidelines for NASA vehicles, Aquila backed off, saying the information was confidential, but Canoo was very focused on building a plant in Bentonville, Arkansas, which is expected to produce “20,000 or so vehicles.” . Kanu, Aguilar said.
Canoo first announced Bentonville plant last November, said at the time that it would also bring forward production of the lifestyle car from early 2023 to the fourth quarter of 2022. That guidance was not updated on Tuesday’s earnings call.
The only bright spot in Canoo’s earnings may be that it received $30.4 million as part of a settlement with Dutch automaker VDL Nedcar. Canoo has prepaid the money to VDL Nedcar to build its “lifestyle electric vehicle” as part of the car manufacturing contract.Partnerships end of December As Canoo discussed a new agreement with VDL Groep.