Canoo couldn't begin production without the cash.Following its decision to sell discounted shares in order to raise $52.5 million, the electric vehicle startup Canoo saw its shares fall earlier this week. Production cannot begin without the funding. Investors are unlikely to be pleased by this latest move, especially given that the stock of the company has lost more than 80% of its value over the past year.
In November of last year, Canoo stated that it planned to issue new shares in order to replenish its cash reserves. It only had $6.8 million in its bank account at the end of Q3 2022.
"General working capital purposes" will be the intended use of the stock sale's net proceeds. Translation: production.
Canoo shares can now be purchased by investors for $1.05 each, and the new warrants can be exercised for $1.30 each. The year 2023 is crucial because Canoo's situation was difficult last year.
In the first and second quarters of 2022, it recorded net losses of $164 million and more than $125 million, respectively. At the time, there was a lot of doubt about whether or not the startup could continue. Fortunately, luck prevailed.
NASA and the US military were two significant partners that Canoo discovered. Additionally, Walmart agreed to acquire up to 10,000 Lifestyle Delivery Vehicles. If the factory that the company wants to build in Oklahoma City, Oklahoma, creates 500 new jobs, it could also get another $1 million in incentives.
The state made an initial effort to entice Tesla to produce the Model Y and Cybertruck, but Elon Musk ultimately chose Texas.
There is yet another reason for investors' anxiety right now: Later this month, Canoo will release its Q4 2022 results.
Sadly, Canoo did not end 2022 on a high note after it was revealed that it was accusing former top executives of stealing IP secrets to start a rival EV automaker, specifically those pertaining to its skateboard flat platform. The company's former vice president of corporate legal, securities, and global strategy is named in the lawsuit.
That person is now in charge of corporate development and general counsel for that new company.
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