Canoo shares fall after fourth quarter loss reported

A Canoo Lifestyles vehicle is shown in this May 20, 2022 file photo at the Canoo car manufacturing plant in Bentonville. (NWA Democrat-Gazette/Charlie Kaijo)
A Canoo Lifestyles vehicle is shown in this May 20, 2022 file photo at the Canoo car manufacturing plant in Bentonville. (NWA Democrat-Gazette/Charlie Kaijo)

Shares of electric vehicle maker Canoo tumbled more than 25% in trading Tuesday after the company reported a fourth quarter loss and said it would be cautious as it began to bring its vehicles to market.

Tony Aquila, Canoo's chief executive officer and executive chairman, said during a conference call with analysts Monday evening it produced only a handful of cars during the quarter. He said the low production numbers are intentional, aimed at delivering a high quality product and avoiding costly production mistakes.

Canoo made less than 20 cars during the quarter and has said it intends to scale up to an eventual run rate of 20,000 annually. Aquila has said Canoo's order book is valued at more than $3 billion with large scale customers that include Walmart.

Canoo released earnings after the market closed Monday and hosted a conference call with analysts afterward.

Shares of Canoo closed at $2.80 cents in trading Tuesday, down $1.07 or nearly 28%.

For the quarter that ended Dec. 31, Canoo reported a loss of $29 million or 4 cents per share compared to loss of $80.2 million or 25 cents per share for the year ago quarter. A consensus estimate of four analysts was $1.96 per share for the quarter, according to Yahoo Finance.

The company reported revenue of $367,000 for the fourth quarter. Analysts had called for revenue of $11.9 million.

For the year, Canoo booked a loss of $302.6 million or 53 cents per share compared to $487.7 million or $1.81 per share for all of 2022. Total revenue for 2023 was $886,000.

For 2024, Canoo predicted an annual revenue of $50 million to $100 million with a quarterly cash outflow of $45 million to $75 million. The consensus of four analysts had estimated revenue for 2024 at $152 million.

During the conference call, Aquila said Canoo is avoiding the broader industry trend of hurrying its vehicles to market -- contending speed and high production numbers aren't the be all end all.

"When in fact, at the opposite, and it's dangerous and expensive to hurry up to slow down," he said.

To date the company has produced 22 vehicles, 17 of those in the fourth quarter for customers including the state of Oklahoma, Kingbee, Zeeba and the United States Postal Service.

Tomas Jandik -- professor of finance and the Dillard's Chair in Corporate Finance at the Walton College of Business at the University of Arkansas, Fayetteville -- said in phone interview Tuesday Canoo's failure to produce vehicles in any substantial numbers is concerning. He said the company has been operating for years without doing any meaningful business and wondered how long it could continue to do so.

"These numbers are incredibly dismal," Jandik said.

Aquila said during the call at this stage of company growth, getting the run rate up without making any costly manufacturing mistakes is more indicative of success than quarterly revenue.

"What's really important is by the time we get to 3,000 units, we have to have the economics right. We've got to have the supply chain aligned, the workforce trained," Aquila said in response to analysts questions. "Otherwise, we can't go to 20,000 units without breaking. It's proven history. So that's what we're focused on. We're focused on being able to execute that and then move to the next increment."

The company touted its cost reduction moves that have brought expenses down. It said during the quarter it received a $45 million investment from a Foreign Strategic Institutional Investor.

Canoo also said Tuesday it signed a sales agreement with Saudi Arabia-based Jazerra Paints to purchase 20 of Canoo's vehicles with the option to buy 180 more.

Canoo recently performed a 1-to-23 reverse stock split in an move to stop its stock from being delisted. Just before the reverse stock split shares were trading in the 10 cent range. The move was an attempt by Canoo to regain compliance with the $1 minimum bid requirement of The Nasdaq Capital Market. A reverse stock split doesn't impact the value of the company but it reduces the number of shares and by doing so pushes the stock price up.

In mid January the company said it has hired more than 100 new employees in Oklahoma, primarily to staff its vehicle plant in Oklahoma City. Canoo also has a battery module plant in Pryor, Okla.

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