Canoo's first-quarter earnings shows a company burning through cash, no near-term revenue and a warning that it may not have enough money to stay in business.
Canoo's shares fell in after-market trading after the release of its earnings. It recovered and is now down more than 10%.
Canoo had a short history. The first of the company's vehicle designs was praised and made a buzzy EV startup. Canoo was selected by NASA to build the ground crew transportation vehicles.
Canoo has had a lot of problems, including internal drama, legal issues, an SEC investigation and production delays.
The latest earnings report paints a gloomy picture of Canoo's future.
The EV startup, which earlier this week filed a suit against one of its major investors in an attempt to recover $61 million in profits from suspicious stock trades, ended the quarter with $104 million in cash and cash equivalents. Since the fourth quarter, the company has burned through about 120 million dollars.
Canoo's net loss was $125.4 million, compared to $15.2 million in the same quarter last year, with net cash used in operating activities totaling $120.3 million.
Canoo's business plans need a significant amount of capital, and if they don't have it, they will not be able to execute their business.
In August 2020 Canoo announced that it had reached an agreement to merge with a special purpose acquisition company with a market valuation of $2.4 billion. Canoo said it was able to raise $300 million in private investment in public equity, or PIPE, including investments from funds and accounts managed by BlackRock.
The PIPE investment has not yet been realized. Canoo said during a call with investors Tuesday that it expected a $300 million private investment in public equity related to its merger to go through this week, and that the company has filed a $300 million universal shelf. Canoo CEO Tony Aquila said $600 million is needed to start production.
Canoo still issued a warning despite the impending money.
A going concern qualification means the company may not have enough money to meet its obligations. Canoo said it would deliver multiple custom models for NASA by June of 2023, as part of a production deadline that included more than 17,500 pre-orders. Canoo's financial concerns call into question the EV maker's ability to meet their commitment.
NASA didn't immediately respond to requests for more information.
When an investor asked about production guidelines for the NASA vehicles, Aquila dodged, saying that information was confidential, but that Canoo was focused on building up the factory in Arkansas, which is expected to produce 20,000-ish vehicles.
Canoo said in November last year that it would move up the start of production of the lifestyle vehicle from early 2023 to the fourth quarter of 2022. During Tuesday's earnings call, that guidance was not updated.
Canoo received $30.4 million as part of a settlement agreement with VDL Nedcar, which may be the only bright spot in the company's earnings. Canoo and VDL Nedcar had a partnership that ended in December as Canoo explored a new deal with VDL Groep.
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