Canoo reduce at Stifel on liquidity dangers

Investing.com — Stifel analysts downgraded Canoo from Purchase to Maintain in a word Tuesday, citing rising issues concerning the firm’s liquidity dangers. 

The downgrade comes after a collection of developments, together with the suspension of manufacturing in Oklahoma and the corporate’s ongoing want for capital to maintain operations.

Of their “30 Shares in 30 Days” report, Stifel famous that whereas Canoo initially maintained a Purchase score as a consequence of its in-house expertise and industrial supply expectations, latest occasions have raised doubts about its monetary stability. 

Stifel highlights that “GOEV is in our ‘Butch Huskey’ class,” referring to a baseball participant with early promise however unprepared for sustained success. 

The downgrade displays the issues about Canoo’s skill to thrive within the aggressive electrical automobile market.

Stifel explains that Canoo has an growing want for capital, with the corporate actively searching for financing whereas grappling with rising operational challenges. 

“The corporate consolidated its amenities to 3 from six, which has continued to affect its workforce. On the finish of October 2024, it furloughed 23% of its Oklahoma Metropolis manufacturing facility staff for ~12 week,” mentioned Stifel. “A couple of days after the furloughs in mid-December, Canoo introduced the remainder of its employees can be on a ‘obligatory unpaid break’ by way of a minimum of year-end 2024.”

These strikes come as the corporate consolidates its amenities from six to 3 places in an effort to chop prices.

As well as, the corporate’s money reserves stay below stress. Stifel factors to the truth that Canoo has been in “lively discussions concerning further financing,” however with out securing the mandatory funds on favorable phrases, it might face insolvency dangers.

A latest submitting from Canoo warned that with out new capital, the corporate might be unable to fulfill its obligations, probably resulting in litigation or additional monetary difficulties.

Reflecting these dangers, Stifel has lowered its income forecasts and diminished the inventory’s goal worth to $0.50, down from $4.50.