SPACs and electric vehicles (EVs) have had a brutal 2021 so far. After catching fire in 2020’s pandemic-driven bull market, both segments have lost favor amongst investors in 2021’s much harder to navigate terrain.
One such name boasting both SPAC and EV credentials and bearing the brunt in this change of sentiment is Canoo (GOEV). Shares of the EV start-up have shed 53% of their value since the turn of the year.
However, H.C. Wainwright’s Amit Dayal believes the stock is now significantly undervalued and thinks the company’s “differentiated design” and proprietary tech will see it take a piece of the expanding EV market.
The 5-star analyst lists the reasons why he thinks Canoo is primed for success: “We believe the company’s business model is positioned to extract significant leverage from: (1) its proprietary modular EV platform that is designed to host a wide variety of vehicle configurations across several segments and use-cases; and (2) pursuit of multiple revenue streams including vehicle sales, over-the-air (OTA) software sales, aftermarket services, and upfitting and re-sale to customers beyond the first owner.”
While the pullback in the EV segment has been across the board, Dayal thinks that at its present level, Canoo stock, specifically, represents a “favorable entry point.” Mainly it’s down to enhanced visibility on some major issues.
For one, the Lifestyle Vehicle’s (LV) first 500-1000 deliveries are anticipated to hit the market by 2H22, and as such, manufacturing and commercialization plans have “become more concrete.” The company also has two other products in its pipeline, also built on it ‘skateboard technology’ – a Multi-Purpose Delivery Vehicle (MPDV), and a Pickup truck.
Secondly, the state of Oklahoma is providing the company with $300 million in grants and subsidies which will go towards the first manufacturing plant. These contributions will “lower capex burden meaningfully.” Furthermore, to support the commercial push, the company is filling key operational roles with auto industry veterans. Not to mention, like many others in the segment, Canoo stands to benefit from expanding regulatory support and “customer incentives” for EVs in Biden’s infrastructure plan.
All these – and additional factors – back a very promising outlook. “We believe the key near- to mid-term milestones are now significantly more simplified, conservative, and concrete,” Dayal summed up. “With institutional ownership relatively low at around 16%, high insider ownership of around 58%, and roughly 32% of the float being short, we believe the stock is set up for a potential squeeze on positive catalysts that could include order related announcements.”
To this end, Dayal rates GOEV a Buy along with a $15 price target, suggesting shares will soar ~129% over the coming months. (To watch Dayal’s track record, click here)
Ok, then, but what does the rest of the Street have in mind for Canoo? There are four recent analyst reviews on record, and they break down to 2 Buys, 1 Hold, and 1 Sell for a Hold consensus rating. The shares are selling for $6.55, and the average price target of $11.50 suggests room for ~76% upside from that level. (See Canoo stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
