Can Canoo Stay Afloat? | Disruptive Investing News

hey everybody I'm Zach and I'm Jesse you're watching disruptive investing news and I thought we'd Jump Right In with canoe oh there's a joke there canoe Jump Right In Jump Right In the canoe so if you don't remember uh the EV startup canoe is one of a group of startup EV companies that spacked in 2020. yeah in December of that year canoe listed on NASDAQ under the go EV ticker symbol and well the stock chart tells the tale it went public with a valuation of 2.4 billion a lot of exuberance a lot of excited people and now has a current market cap of around 320 million that's a drop of about 86 percent and what's happened with canoe is kind of indicative of what's happened with a bunch of these EV startups like Lordstown Nicola Lucid rivian arrival arkamoto and Faraday future yeah they went public when the market was just exuberant about all things EVs and then remember also that money was cheap back then they got used to burning cash at way too fast to rate and acted like there would always be more financing rounds to get them out of trouble and they all encountered production in hell like Elon has described so canoe ended last year with only 36.6 million dollars in the bank and if that sounds like a lot because I know if I opened up my bank account and found 36 million I'd be like woohoo uh keep in mind that canoe burned through 487.7 million in 2022. but you titled this story canoe stays afloat here in the script well yeah because the news out this week is that canoes chairman and CEO Tony Aquila has signed a long-term lease with AFV Partners to use 500 000 square feet of its vehicle manufacturing facility in Oklahoma City Oklahoma to build canoes LDV their lifestyle delivery vehicles wasn't canoe already building a plant in Oklahoma yeah so canoe started building a plant about 150 miles away in Pryor Oklahoma and they were slated to get 300 million dollars in state grants but canoe missed their construction deadlines and so the state negated 10 million dollars in those grants so basically the early checks did not go out and they'll be losing more if they miss more targets and the problem is once you start missing the checks from the first targets you don't have money to pay your construction people so you start missing more targets as my guess so canoe is going to move into an already built facility the AFV Partners plant in Oklahoma City right in fact Tony Aguila is the chairman and CEO of AFV Partners so that's probably how that came to be but I mean with only 36 million dollars in cash isn't canoe gonna run out of runway in like eight minutes uh yeah right because I mean that was the end of December um and it's already we're three months in uh well canoe CFO Ken magnet said canoe is exploring a number of Diversified funding sources and he says that now canoe can file for the Department of Energy's Loan program now that the SEC investigation has been resolved oh right because uh canoe paid a 1.5 million dollar fine to settle with the SEC which had been investigating canoe ever since they smacked right um so that's behind them but so are things like um do you remember that press release canoe put out a while back where they were delivering an LDV to the US Army in Q4 well they did deliver it and they got paid sixty seven thousand six hundred dollars uh it seemed like a big story at the time because that canoe gets U.S army contract yeah for one demonstration vehicle I mean that's the problem with headlines um you know canoe puts out the press release and this isn't only them a lot of these companies do that the Press is desperate for stuff to just get eyeballs so they just kind of repackage the press release canoe gets Army contract um yeah it was for one vehicle and and to be fair if the Army likes it they might want to buy more but canoe hasn't even gotten to the hard part yet in my opinion which is mass production and they're basically out of money it seems so now disclaimer I hold stock and canoe so that I can better inform our now you know investor club and you might be like Zach why would you buy stock in a company that you think is crap um well it's it's so that I can watch it on a closer basis because honestly if I didn't own stock in it I might not stay as connected to all the ins and outs um owning stock in a company means that you usually pay a little more attention to it so that's one of the benefits that we do for you guys is when all of those companies were spacking we bought a lot of that stock to follow it not a lot of money in it but just that I could stay attention you can join us over on our patreon and that's where we talk to our investor Club every week with bonus stories we're going to have live streams for instance with a monogram coming up soon so that you can find out both about things you want to invest in and maybe things you don't that don't sound so good it's not all about just like giving you stock tips um but I'm not that hopeful that canoe is going to be able to survive much longer right I mean clearly they have some pretty good marketing um because you know like the the Army story sounded great when that first came out I was like oh wow well I'm just gonna make uh army vehicles and that'll save them and they got paid you know sixty seven thousand dollars well that's the thing they've come out with the Walmart story like right you know and and look Walmart smart deal for Walmart sign up to buy a bunch of these vehicles if and when they can produce them at a certain cost that's deep in the contract that you don't hear about um and it sounds good to the public whoa canoe is gonna sell to Walmart and I saw Walmart good job EVS that's great what we don't understand most of us investors is that Walmart and other big companies are signing deals like this all the time time and they're just to get their fingers into something and if it works great if it doesn't nothing happens didn't even really cost them anything no and so here same thing like it is good marketing it's smart for canoe to be putting out positive stories but it all comes down to the scale production and I don't see how they're going to be able to scale the production of this first of all I don't even know if this product is really that great a product yet because we haven't gotten our hands on it and the last point I want to make is this comment by their CFO about well now we can get Department of energy Loan program funding do you know that arcimoto was trying to get that funding for years it is not an easy process it is not like oh okay fill out the one-page loan application I'd like my money please if it takes months and isn't it a reimbursement program well there's a bunch of programs I think the one they're talking about is just a loan and again how's that going to help them I mean they're gonna have to pay it back a lot of these companies are just so desperate to keep the cash coming in to keep you know being able to do anything and I got to tell you when you're down to 36 million in cash and like we said they're probably down to fumes now you're just laying off people the morale goes down I just don't see how they're going to keep going and plus I mean look at their stock price again right um at that price NASDAQ is going to kick them off the exchange soon so they're gonna have to do reverse split and then everyone's gonna it's just yeah it's it's sad um and it doesn't mean EVS are bad it just means that it it's harder than it looks I wonder if they had taken a different approach take the exact same vehicle take a lot of the exact same points maybe don't start off as being like we're gonna make a subscription service autonomous EV because I don't think that that was I'm glad that they pivoted early on that but I mean if they hadn't spacked with a 2.4 billion dollar valuation um if they hadn't done that then we wouldn't be seeing this go down this is the problem with specs getting all that money before you've actually proven that you can make money it's just a stupid stupid idea because then you're going to start burning through all that money all the exuberance that you made during this backflip this is amazing we're gonna do it not it doesn't turn out because of course it's not going to turn out for years to come right and then you mix this in with all these other specs that are all failing at the same time and that's I think what amplifies this I mean now would it be a successful company had they done it kind of a more traditional way I don't know I don't feel like it well then the other thing is this company's pivoted so many times and I I you know it is funny companies like Nokia like one of their first products was toilet paper it is true that a lot of companies pivot um they just didn't get the product right in the beginning canoe was first going to do an autonomous vehicle which is great I think you should do that but as you're seeing it's not easy and cheap and it's not cheap so this idea that just like with a small team you can make an autonomous vehicle that wasn't going to work so they had to Pivot they pivoted to you know the LDV they've also made this cool pickup truck they've also made a food truck like lots of cool kind of uh stuff but I feel like they're all distractions exactly and you got to pick one you got to focus on it and you got to make it at extremely low cost and that's really really hard yeah and I mean it really shows how important manufacturing is uh over design design it's it's important but not near not nearly in the same way well and you have to design for manufacturing yeah look like for instance when you make something beautiful like let's say you love the LDV or you love their pickup truck that's great but can it be produced cheaply and they talked a lot about like oh 3D printing 3D printing that is not cheap and it's not really hit its prime yet yeah so there's a lot of I think just it sounded good to investors who didn't really know a lot about it and I mean this comes back down to the designer effect where they they you know and companies do this all the time all sorts of different designers they always they come out and they talk about the design and they show a guy with a pencil you know like drawing their thing for the umpteenth time and they're just like this is this design is just amazing it's like doesn't matter and then they're like oh and the materials and they have like a guy and he pulls the fabric off of the the you know role and he's like playing with it and you're like oh wow material I want to talk about materials when we did get to see some of these prototypes on video the materials look really flimsy a lot of the features on like the pickup truck look like they wouldn't last um and on the food truck like food truck has to be built like a tank I know so again it's it's a lot of Showmanship and I think they're really high in that rating I think Tony's good at that I just don't think he's gonna be able pull this out that's just my you know disclaimer I'm not a financial advisor don't take my word for whether you should invest or non-invest in a company I'm just trying to give you kind of the feeling of look we're big EV fans here but it's really hard to compete against the Big Elephant Room which now is testing thank you so much for joining us on disruptive investing news we'll see you next week disruptive investing yeah

Channel: Disruptive Investing

Views: 21,145

Keywords: disruptive, investing, stock market, stocks, stock exchange, new york, usa, companies, startup, invest, what to invest in, future, technologies, tech, company, disruptive investing, club, top, investments, money, save, bank, growth, exponential, science, sustainability, canoo, SPAC

Id: 8hGa1saLR_c

Length: 9min 50sec (590 seconds)

Published: Tue Apr 18 2023