Model Y

Make
Tesla
Segment
SUV

Electric vehicle startup Canoo saw its shares drop earlier this week following its decision to sell discounted shares to raise $52.5 million. The money is needed to get production up and running. This latest move is not expected to please investors, especially since the company's stock has lost over 80% of its value over the past 12 months.

Canoo said last November that it was running low on cash and planned to raise additional funds by issuing new shares. At the end of Q3 2022, it had only $6.8 million in its bank account.

The net proceeds from this stock sale will be used for "general working capital purposes." Translation: production.

Investors can now purchase Canoo shares for $1.05 per share and can exercise the new warrants for $1.30 per share. Things were challenging for Canoo last year, so 2023 is critical.

It posted more than $125 million and $164 million net losses in the first and second quarters of 2022, respectively. At the time, there was serious concern the startup would be able to continue. But fortunately, luck struck.

Canoo found major partners from the likes of NASA and the US military. Walmart also agreed to purchase up to 10,000 units of the Lifestyle Delivery Vehicles. The company could also receive another $1 million in incentives if it generates 500 new jobs at the factory it aims to build in Oklahoma City, Oklahoma.

The state initially tried to lure Tesla for Model Y and Cybertruck production, but Elon Musk ultimately chose Texas instead.

Investors have another reason to be nervous right now: Canoo will release its Q4 2022 results later this month.

Unfortunately, Canoo did not end 2022 on a high note following the revelation it was accusing former top executives of stealing IP secrets, specifically involving its skateboard flat platform, to start a rival EV automaker. Among those named in the lawsuit are its former vice president of corporate legal, securities, and global strategy.

That individual now serves as that new company's general counsel and head of corporate development.