Canoo’s stock sinks toward a record low, even as Wedbush sees 1,800% rally potential

Shares of Canoo Inc. continued dropping into record-low territory Friday, even after Wedbush analyst Dan Ives recommended investing in the electric-vehicle maker, which he says has a “golden opportunity” to benefit in the current last-mile delivery market.

With current partners such as Walmart Inc. WMT, -0.67%, an order book of more than $3 billion, and over $750 million in committed orders, which effectively sells out production until fiscal 2025, “we believe Canoo has strong momentum to become a disruptive player in the Class 1 vehicle market,” Ives wrote in a note to clients. Class 1 vehicles include the delivery vans that Canoo makes.

Ives initiated coverage of Canoo’s stock GOEV, +11.62% with an outperform rating. His 12-month price target of $4 implies 1,788% upside from current levels in the next year.

The stock slumped 0.7% in midday trading Friday, after closing Thursday at a record low of 21.3 cents. The stock’s decline reversed an earlier gain of as much as 12%. The stock has closed below the $1 level since Feb. 9, 2023.

Canoo became a public company on Dec. 21, 2020, after completing a merger with special-purpose acquisition company Hennessy Capital Acquisition Corp. IV. Canoo’s stock closed at $18.89 on Dec. 22, 2020, its first day of trading.

“Although in the infancy stages of its growth story, we believe it is important to keep an eye on this EV manufacturer chipping away at market share as this growth story unfolds,” Ives wrote.

Ives said the last-mile delivery transportation market is expected to reach about $425 billion by 2030 in the U.S. alone, with compounded annual growth in the 35% range through 2040 as EV demand keeps growing.

“We believe the current climate is favorable for Canoo at this point, as we are in the early innings of this $5 trillion market EV opportunity over the next decade, with the auto industry … going through one of the biggest transformations not seen since the 1950s,” Ives wrote.

Despite Ives’s bullishness, buyers should beware. The company has included warnings that it “has identified substantial doubt about our ability to continue as a going concern” in every audited quarterly and annual filing since the first quarter of 2022.

“If we are unable to obtain sufficient additional funding or do not have access to additional capital, we will be unable to execute our business plans and could be required to terminate or significantly curtail our operations,” the company said in the 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ending Sept. 30, 2023.

Canoo’s stock has plummeted 82% over the past 12 months, while the Global X Autonomous & Electric Vehicles exchange-traded fund DRIV has rallied 17% and the S&P 500 index SPX has advanced 23.3%.