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Canoo (GOEV) stock price forecast ahead of earnings: buy or sell?

By: Invezz

Canoo (NASDAQ: GOEV) stock price has stabilised a bit since April after the company received a big order from Saudi Arabia. It has risen by over 7% in the past 30 days and by 130% from its lowest point this year. 

Still, in the long term, Canoo is one of the top laggards in Wall Street. It has dropped by over 55% this year and by over 99% from its highest point in December 2020. In this period, its market cap has dropped from over $4.7 billion to $169 million.

The number of outstanding shares has risen from 1.3 million in 2020 to over 37.5 million today, making it a dilution machine. 

Canoo earnings ahead

Canoo’s stock collapse happened at a time when most electric vehicle companies have also dived. Tesla has fallen by over 55% from its highest point in 2022 while Rivian is down by over 93% in the same period. Lucid Group has plunged by over 95% from its highest level in 2022.

Altogether, I estimate that EV investors have lost over $1.5 trillion as European, American, and Chinese EV companies have plunged. 

Canoo and other companies have also burned substantial sums of money in their goal of becoming the next Tesla. Its net loss in 2019 came in at $186 million, then narrowed to $86 million in 2020. It then lost $346 million, $487 million, and $302 million in the next three years, bringing the total losses to over $1.4 billion.

It is common for new EV companies to lose substantial sums of money before moving to the commercial phase of their development. Tesla lost a fortune before starting to sell its vehicles.

The difference between Tesla and Canoo is that it lost all that money in a period of low-interest rates when raising capital was easy. Today, interest rates sit at their highest level in over 20 years and they will remain higher for longer.

That is a big challenge for a company that is running low on cash. Data by SeekingAlpha shows that the firm ended the quarter with about $12.7 million in cash and over $28.9 million in long-term debt. It also had over $51.2 million in short-term borrowings, which explains why it has continued to warn about its ability to continue as a going concern.

Canoo has also warned that its revenue for the year will be lower than estimates. The firm estimates that its revenue will be between $50 million and $100 million. The average estimate among analysts was for revenues to be about $152.5 million.

Therefore, May 14th will be an important day for Canoo as it publishes its first-quarter results that will provide more colour about its operations and cash balance. In most cases, stocks tend to rise and fall sharply after publishing their financial results. 

To be clear: Canoo has made a lot of progress lately. It won a Foreign Trade Zone license in Oklahoma and a big deal from Saudi Arabia. Also, the company has a confirmed backlog of almost $750 million, which explains why analysts are bullish on the stock. Analysts at Benchmark and HC Wainwright have a bullish view of the company.

Canoo stock price forecastcanoo stock

GOEV chart by TradingView

Turning to the daily chart, we see that the GOEV share price has remained in a consolidation phase in the past few days. As a result, it is consolidating at the 50-day and 25-day Exponential Moving Averages (EMA).

Oscillators like the Relative Strength Index (RSI) and the MACD indicator have moved sideways showing that it has no momentum. Most importantly, the stock has formed a symmetrical triangle pattern, which has reached its confluence level.

Therefore, my view is that the stock will have a bearish breakout either before or after publishing its financial results on May 14th. If that happens, the stock will likely have a bearish breakout as sellers target the key support at $1.22.

The post Canoo (GOEV) stock price forecast ahead of earnings: buy or sell? appeared first on Invezz

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