How High Will Canoo Stock Go?

How High Will Canoo Stock Go?

GOEV stock has fallen below $5 in 2022 but that doesn’t mean the company won’t survive in the long run. Backed by retail giant Walmart, Canoo produces a unique and spacious electric vehicle that is built for the electric car revolution.

The company has received several preorders this year from Walmart, Zeeba, and Kingpee totaling up to 34,050 vehicles with an order book value of $1.3 billion.

How High Will GOEV Stock Go Realistically?

GOEV stock could realistically 10x from its current price and trade just above its SPAC debut price at $15. Of course, that’s assuming the company doesn’t dilute shareholders too much to raise capital.

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The company moved its headquarters to Bentonville, Arkansas to work closely with Walmart so I don’t think Canoo has to worry about going bankrupt. Walmart is large enough that the retail and e-commerce king could buy Canoo due to its $325 million market cap.

There is some risk here but I think GOEV shares are pretty undervalued and have a lot of room to run.

More Reservations Will Come in Thanks to Walmart

Whenever Walmart signs a deal with your company, you know that a ton of smaller companies will follow its lead. That’s exactly what happened after Walmart agreed to purchase 4,500 last-mile delivery EV vans from Canoo.

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Social proof is a real thing and now Canoo is becoming sought after for its spacious EV delivery vans. The company has signed two brand new deals since onboarding Walmart with Zeeba and Kingbee.

That’s over 34,000 EV reservations if all 3 companies order the max capacity. Now, Canoo has potentially over $1 billion in future revenue even though GOEV’s market cap is way less than $500 million.

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There is a 50% margin of safety if you value GOEV stock at a P/S ratio of just 1. EV industry leader trades at a 10 times Price to Sales ratio, which shows Canoo is grossly undervalued.

Dilution is My Only Concern Going Forward

EV startups usually lose money in the first few years of production while the company is growing quickly. That could be the only issue with GOEV stock moving forward because scaling up revenue requires either taking on debt or diluting shareholders through stock offerings.

Canoo announced a $200 at-the-market stock offering in August 2022, which sent GOEV stock crashing. There may be more offerings in the future because the company ended Q2 2022 with only $33 million in cash on hand.

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Canoo is running out of money but has plenty of demand for its lifestyle EV. If the company can survive then GOEV stock could be one of the best cheap growth stocks to buy this decade.

Conclusion

I’m bullish on GOEV stock because it’s cheap and has plenty of growth potential. If you are okay with some future dilution then Canoo stock could work for you. I hold a small position as a lotto ticket and look forward to watching the company grow in the future.

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