Why Canoo Could Crumble If Its Plans Don't Work Out Perfectly
Canoo (NASDAQ: GOEV) recently filed a going concern warning with the Securities and Exchange Commission (SEC), suiggesting the company could curtail operations if it runs out of cash. One important highlight of this warning was that the company needed to access new cash by selling bonds and/or stock. It did just that, raising roughly $45 million via a convertible debt sale. The company's financial problems are not over and could actually be complicated by the sale, though.
Canoo is basically in the start-up phase, trying to build an electric vehicle business from the ground up. That costs a lot of money and most of it has to be spent before any material revenue flows in. For example, in the first quarter of 2023 Canoo lost $0.22 per share on zero revenue. That was better than the prior year, when the company lost $0.54 per share while bringing in zero revenue. The important trend here is that Canoo isn't selling anything, it is just spending money.
Image source: Getty Images.
Source Fool.com
