EV startup Canoo (GOEV) released its fourth-quarter earnings Thursday as it enters a critical phase of development. After resolving the SEC investigation and agreeing to pay $1.5 million, Canoo says it has new opportunities to access funding.
Canoo resolves SEC dispute with $1.5M settlement
Since its foundation in Canoo 2017, the EV maker has had its fair share of highs and lows.
After going public in 2020, along with a slew of other electric vehicle startups (and SPACs in general), Canoo became one of the talked about stocks with significant growth potential in the EV segment.
However, the hype soon dissipated. In April 2021, the SEC opened an investigation into the company’s merger with special acquisition purpose company (SPAC), Hennessy Capital Acquisition Corp (HCAC), to go public.
The scrutiny was part of a broader investigation that included several popular EV stocks such us Nikola (NKLA), Lordstown Motors (RIDE), and Faraday Future (FFIE).
The SEC informed the company that it believed, under its investigation, that certain former senior executives misled investors in late 2020 and early 2021 regarding revenue projections.
In March 2021, new leadership revised the projections to zero after eliminating engineering services as a potential revenue stream.
After a long-awaited battle, Canoo revealed during Thursday’s Q4 earnings release it had reached the conclusion of the SEC investigation, agreeing to pay a $1.5 million settlement.
With the investigation and other “legacy matters” behind it, Canoo says it’s ready to enter the next phase of its EV rollout.
Canoo electric pickup (Source: Canoo)
Canoo Q4 highlights and business updates
Besides the SEC investigation, Canoo had several exciting developments in the quarter, including delivering its Light Tactical Vehicle (LTV) electric vehicle to the US Army.
Canoo still didn’t generate revenue in the quarter, ending Q4 with a net loss of $80.2 million for a loss of $487.7 million on the year.
The EV maker ended the quarter with cash and equivalents of $36.6 million. According to Canoo’s CFO Ken Magnet, the company is “exploring a number of diversified funding sources.” Magnet added now that the SEC investigation is concluded, the company can file for things like the Department of Energy’s loan program and “things of that nature.”
Canoo struggled to stay afloat last year, expressing significant doubt it would be able to continue operations after posting a net loss of over $125 million in the first quarter and another $164 million loss in Q2.
Looking ahead, Canoo expects operating expenses to be between $55 million to $70 million with CAPEX between $30 million to $45 million in the first quarter of 2023 as it enters the next stage of development.
As CEO Tony Aquila describes the next phase will be “more focused on milestones versus event-based or just-in-time” that will “lower the cost, make more efficicent use of capital and allow us to focus on long term success.”
Canoo says it will benefit from the IRA bill with domestic production. The company began phase 1 SOPin Mivchigan and kicked off phase 2 SOP at OKC, which includes an EV battery module manufacturing plant in Oklahoma.
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Most Wall Street analysts covering Tesla’s stock (TSLA) badly misread the automaker’s delivery volumes this quarter. Some of them have started releasing notes to clients following Tesla’s production and delivery results.
Here’s what they have to say:
According to Tesla-compiled analyst consensus, the automaker was expected to report “377,592 deliveries” in the first quarter.
Truist Securities maintained its hold rating on Tesla’s stock, but it greatly lowered its price target from $373 to $280 a share. They insist that while their earnings expectations have crashed because they overestimated deliveries, investors should focus on Tesla’s self-driving effort, which they see as “much more important for the long-term value of the stock.”
Goldman Sachs lowered its price target from $320 to $275 a share. The firm expected 375,000 deliveries from Tesla in Q1 and therefore had to adjust its earnings expectations with almost 40,000 fewer deliveries.
Wedbush‘s Dan Ives, one of Tesla’s biggest cheerleaders, called the delivery results “disastrous”, but he reiterated his $550 price target on Tesla’s stock.
UBS has reiterated its $225 price target which it had lowered last month after adjusting its delivery expectations in Q1 to 367,000 – one of the more accurate predictions on Wall Street.
CFRA‘s analyst Garrett Nelson reduced his price target from $385 to $360 a share.
Electrek’s Take
I find it funny that most of them are maintaining or barely changing their expectations after they were so wrong about Tesla in Q1.
If you were so wrong in Q1, you should expect to be incorrect also for the rest of the year, and readjust accordingly.
But Cantor is invested in Tesla, and the firm is owned by Elon’s friend, who happens to now be the secretary of commerce. Truist still believes Elon’s self-driving lies, Goldman Sachs overestimated Tesla’s deliveries by the equivalent of $2 billion in revenues, and Dan Ives is Dan Ives.
Covering Tesla over the last 15 years has confirmed to me that most Wall Street analysts have no idea what they are doing – or at least not when it comes to companies like Tesla.
Do you know any who have been consistently good lately? I’d love suggestions in the comment section below.
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The global market rout on Thursday, sparked by President Donald Trump’s announcement of widespread tariffs, had an outsized effect on fintech companies and credit card issuers that are closely tied to consumer spending and credit.
Affirm, which offers buy now, pay later purchasing options, plunged 19%, while stock trading app Robinhood slid 10% and payments company PayPal fell 8%. American Express and Capital One each tumbled 10%, and Discover was down more than 8%.
President Trump on Wednesday laid out the U.S. “reciprocal tariff” rates that more than 180 countries and territories, including European Union members, will face under his sweeping new trade policy. Trump said his plan will set a 10% baseline tariff across the board, but that number is much higher for some countries.
The announcement sent stocks reeling, wiping out nearly $2 trillion in value from the S&P 500, and pushing the tech-heavy Nasdaq down 6%, its worst day since the start of the Covid-19 pandemic in 2020.
The sell-off was especially notable for companies most exposed to consumer spending and global supply chains, including payment providers and lenders. Fintech companies that rely on transaction volume or installment-based lending could see both revenue and credit performance deteriorate.
“When you go down the spectrum, that’s when you have more cyclical risk, more exposure to tariffs,” said Sanjay Sakhrani, an analyst at Keefe, Bruyette & Woods, citing PayPal and Affirm as businesses at risk. He said bigger companies in the space “are more defensive” and better positioned.
Dan Dolev, an analyst at Mizuho, said bank processors such as Fiserv are less exposed to tariff volatility.
“It’s considered a safe haven,” he said.
Affirm executives have previously said rising prices might increase demand for their products. Chief Financial Officer Rob O’Hare said higher prices could push more consumers toward buy now, pay later services.
“If tariffs result in higher prices for consumers, we’re there to help,” O’Hare said at a Stocktwits fireside chat last month. Affirm CEO Max Levchin has offered similar comments.
However, James Friedman, an analyst at SIG, told CNBC that delinquencies become a concern. He compared Affirm to private-label store cards, and pointed to historical trends in credit performance during downturns, noting that “private label delinquency rates run roughly double” in a recession when compared to traditional credit cards.
“You have to look at who’s overexposed to discretionary,” he said.
Affirm did not provide a comment but pointed to recent remarks from its executives.
Wait, Mazda sells a real EV? It’s only in China for now, but that will change very soon. The first Mazda 6e built for overseas markets rolled off the assembly line Thursday. Mazda’s new EV will arrive in Europe, Southeast Asia, and other overseas markets later this year. This could be the start of something with a new SUV due out next.
Mazda’s new EV rolls off assembly for overseas markets
The Mazda EZ-6 has been on sale in China since October with prices starting as low as 139,800 yuan, or slightly under $20,000.
Earlier this year, Mazda introduced the 6e, the global version of its electric car sold in China. The stylish electric sedan is made by Changan Mazda, Mazda’s joint venture in China.
After the first Mazda 6e model rolled off the production line at the company’s Nanjing Plant, Mazda said it’s ready to “conquer the new era of electrification with China Smart Manufacturing.”
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The new global “6e” model will be built at Changan Mazda’s plant and exported to overseas markets including Europe, Thailand, and other parts of Southeast Asia.
Mazda calls it “both a Chinese car and a global car,” with Changan’s advanced EV tech and Mazda’s signature design.
Mazda 6e electric sedan during European debut (Source: Changan Mazda)
Built on Changan’s hybrid platform, the EZ-6 is offered in China with both electric (EV) and extended-range (EREV) powertrains. The EV version has a CLTC driving range of up to 600 km (372 miles) and can fast charge (30% to 80%) in about 15 minutes.
Mazda’s new EV will be available with two battery options in Europe: 68.8 kWh or 80 kWh. The larger (80 kWh) battery gets up to 552 km (343 miles) WLTP range, while the 68.8 kWh version is rated with up to 479 km (300 miles) range on the WLTP rating scale.
At 4,921 mm long, 1,890 mm wide, and 1,491 mm tall, the Mazda 6e is about the size of a Tesla Model 3 (4,720 mm long, 1,922 mm wide, and 1,441 mm tall).
Mazda said the successful rollout of the 6e kicks off “the official launch of Changan Mazda’s new energy vehicle export center” for global markets.
The company will launch a new SUV next year and plans to introduce a third and fourth new energy vehicle (NEV).
Although prices will be announced closer to launch, Mazda’s global EV will not arrive with the same $20,000 price tag in Europe as it will face tariffs as an export from China. Mazda is expected to launch the 6e later this year in Europe and Southeast Asia. Check back soon for more info.
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