Shares of the EV (electric vehicle) startup Canoo (NASDAQ:GOEV) closed over 27% higher on July 14. The spike in this penny stock followed its delivery of three CTVs (Crew Transportation Vehicles) to NASA’s (National Aeronautics and Space Administration) Kennedy Space Center in Florida. These EVs will transport the astronauts to the launch pad for the Artemis lunar missions. Including the recent jump, GOEV stock has gained approximately 51% in the past 10 trading days.
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Canoo to Gain from Strong Demand
Canoo will benefit from the solid demand for zero-emission and technology-driven vehicles. Further, its strategy of focusing on geographies where there is availability of capital, high-volume buyers, favorable regulatory conditions, and current demand bodes well for growth.
In addition, its EVs qualify for an IRA (Inflation Reduction Act) tax credit. Meanwhile, the company has managed to lower operating expenses. The company delivered an adjusted loss of $0.17 per share in Q1, compared to a loss of $0.51 per share in the prior-year quarter. The improvement reflects a 25% year-over-year decline in operating expenses.
The image below shows that Canoo has successfully cut losses over the past three consecutive quarters.
Overall, strong demand and a reduction in costs bode well for long-term growth. However, Canoo is still in its development phase and would need significant capital to ramp up production and become profitable. Thus, access to capital and equity dilution remain concerns.
What is the Prediction for GOEV Stock?
Despite the recent run, the penny stock is down about 80% in one year on concerns around liquidity and access to capital. Stephen Gengaro of Stifel Nicolaus is bullish about GOEV stock. The analyst initiated coverage with a Buy recommendation on June 26 due to a solid backlog. While Gengaro is optimistic about GOEV’s prospects, he sees it as a “high-risk, high-reward stock.”
Overall, GOEV stock has received three unanimous Buy recommendations for a Strong Buy consensus rating. These analysts’ average price target of $4.50 implies a significant upside potential of 536.67% from current levels.
While Canoo stock sports a Strong Buy consensus rating, investors can use TipRanks’ penny stock screener to find more such attractive Penny stocks with the potential to deliver attractive returns.
