The Canoo (NASDAQ: GOEV) stock price is hovering near the lowest level on record as concerns about the company’s future continue. The shares were trading at $0.6700 on Friday, a few points above the all-time low of $0.50. It has crashed by more than 97% from its highest point in December 2020.
How long can Canoo stay afloat?
Recent history in the electric vehicle industry shows that building a profitable company from scratch is substantially expensive and capital-intensive. Most companies that manufacture EVs are yet to turn profitable.
For example, Rivian, the popular truck manufacturer, has lost over $12 billion in the past three years. Similarly, Lucid, which is backed by Saudi Arabia, has plunged by more than $4 billion in the past few years.
Even large auto manufacturers like Ford and General Motors have lost billions of dollars in their EV companies. The most recent results showed that ford was losing over $60,000 for every EV it sold. The company also plans to lose over $3 billion in its EV segment this year.
Therefore, there is a likelihood that smaller companies in the sector will struggle to turn a profit in the long term. This explains why most of them like Canoo, Lordstown Motors, and Nikola have seen their shares collapse.
Canoo, a small company that has seen its losses mount in the past few years. Net loss soared from over $76.2 million in 2018 to over $487 million in 2022. And its cash is running out considering that the company ended the quarter with $6.7 million in cash and short-term investments. Using its sale of convertible debentures, the company has access to about $69.7 million.
These funds are not enough because of how the company is spending its funds. For example, its R&D costs in Q1 came in at $47.1 million while SG&A expense came in at $29.8 million. Therefore, while the company is reducing its expenses, there are concerns that these cuts will not be enough.
Canoo stock price forecast
GOEV chart by TradingView
Canoo share price has been in a strong downward trend since 2022. It is hovering slightly above the important support level at $0.5405, the lowest level on record. The volume has continued falling while Bollinger Bands have narrowed. It has moved to the 25-day and 50-day exponential moving averages.
Therefore, unless there is a short-squeeze, there is a likelihood that the shares will continue falling as sellers target the key support at $0.5405. A drop below this price will likely see the shares slip below $0.50. Also, it is worth noting that the company will need to have a reverse stock split to comply with Nasdaq listing rules.
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