Two big things happened for electric vehicle (EV) maker Canoo (NASDAQ:GOEV) this past week. The big question is whether this represents the beginning of a GOEV stock revival that takes it into the $20s and beyond.
In early January, CNBC’s Jim Cramer argued that GOEV was a good buy around $12. A quick look at the chart for 2021 shows that the Mad Money host’s timing was spot on. By mid-January, it had rocketed to almost $20. Since then, it’s been on a rollercoaster ride down to $15.
In my first-ever article about the EV stock, which wasn’t too long after Cramer’s call, I suggested investors with fun money ought to consider Canoo at $15 and change. With a couple of peaks and valleys in between, it’s basically gone sideways.
As I stated in the opening paragraph, the week of March 8-12 will go down as a good one for two reasons. I wonder if that will be enough.
GOEV Stock Has Gained Much
Currently, Canoo’s stock is up around 32% on the week. If next week is successful, the price will blow through $20.
Do I hear $30? Dare I ask?
What once looked like a stock left for dead at the start of last week — in February and the first week of March, GOEV lost more than 40% of its value — is now a possible momentum play.
Remember, when a stock loses 40% of its value, it has to rise 67% to get back to breakeven. Looking at its weekly performance in 2021, there isn’t a single week that gets anywhere close to 40%.
So, if you bought GOEV anywhere between $15 and $19 a share, you ought to breathe a big sigh of relief right now.
But let’s not kid ourselves. There was a reason for the gains.
Canoo Gets a Pickup
On March 10, Canoo revealed its latest EV, a fully electric pickup truck, at the Motor Press Guild’s Virtual Media Day. Preorders start in 2021’s second quarter, with deliveries set for 2023.
One thing that really intrigues me about the pickup is that it comes with a pull-out bed extension that takes a six-foot bed and extends it two feet. The company’s press release notes that the pickup’s bed will easily accommodate a 4-by-8-foot sheet of plywood.
My wife happens to own a construction business. Finding a pickup these days with an eight-foot bed, especially used ones, isn’t easy. So, at least I know the company has its ear to the ground when designing vehicles.
The pickup is Canoo’s third vehicle based on its proprietary multi-purpose platform architecture. By eliminating the engine compartment through the use of steer-by-wire controls and other space-saving technologies, it’s able to introduce a flatbed-sized pickup truck on a much smaller footprint.
Canoo’s pickup will have front and rear motors with up to 600 horsepower and 550 lb-ft of torque. There will be an all-wheel-drive version with 1,800 pounds of payload capacity and a range of over 200 miles.
I joked to my wife about her getting one. In my January article about Canoo, I called its Lifestyle Vehicle “ugly as sin.” The pickup isn’t much better. However, if it’s functional, easy to drive, and good for the environment, I’m sure that many construction businesses will give it a serious look.
The Bottom Line
I continue to believe that EV manufacturers, especially startups that focus their energy on the commercial side of things in the near term, ought to do better financially in the long run.
So, the fact two out of three of the company’s vehicles are commercial in nature suggests that the risk profile isn’t quite as high as it would be was it trying to convince only consumers to buy its products.
In my second article about Canoo at the end of January, I suggested investors consider the Morgan Creek-Exos SPAC Originated ETF (NYSEARCA:SPXZ) because it actively manages an equal-weighted portfolio of both pre-and post-combination SPACs, including GOEV.
For example, if you were considering a $5,000 bet on GOEV, you could put 50% into GOEV and the other 50% into SPXZ. Alternatively, you put one-third in SPXZ, a third into GOEV stock, and a third you would keep in cash to buy either GOEV or SPXZ were they to correct a significant amount.
Whatever you choose, GOEV stock is not a sure thing. That said, below $15, it remains attractive for fun-money plays.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.