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Canoo, a company that is developing passenger and commercial electric vehicles (EVs) based on a highly versatile skateboard platform, has received a major endorsement today.
Roth Capital, an investment banking company headquartered in California, initiated Canoo with a Buy rating today, pegging a $30 stock price target. Bear in mind that the EV manufacturer is slated to merge with the SPAC Hennessy Capital Acquisition Corp. IV (NASDAQ:HCAC) in the latter part of December. In the current pre-merger phase, shares of Hennessy Capital continue to serve as a proxy for Canoo. Interestingly, Roth Capital’s share price target corresponds to an upside potential of over 60 percent relative to the SPAC’s current stock price of $18.47.
As far as the details of this coverage are concerned, Roth Capital analyst Craig Irwin believes that Canoo’s low-cost skateboard design approach is “compelling”. Moreover, the analyst believes that Canoo’s subscription-based model of operations would yield “above-industry margins”, culminating in an impressive growth trajectory.
As stated earlier, shareholders of the SPAC Hennessy Capital are scheduled to approve the proposed merger with Canoo during a special meeting on the 21st of December 2020. If this proposed merger is approved by a plurality of the shareholders, the shares of the combined company will commence trading on the NASDAQ stock exchange under the symbol GOEV. Moreover, the combined company will adopt the name Canoo Inc. upon the closure of the proposed merger agreement.
Canoo’s star attraction is its highly flexible and modular skateboard platform that enables rapid development of electric vehicles – the entire process concludes in 18 to 24 months – at a substantially reduced cost. Crucially, the company’s skateboard platform offers direct integration of battery modules and features the flattest and lowest profile in the industry, thereby maximizing interior space and lowering costs.
Moreover, in a departure from the industry norms, Canoo’s Lifestyle and Sport models will be available to the consumers via an innovative subscription business model. With a single monthly payment, consumers will be able to avail of a comprehensive list of perks, including standard maintenance, warranty, insurance, and vehicle charging.
Canoo plans to engage an OEM to produce its vehicles, thereby reducing its CAPEX requirements substantially. As far as financial projections are concerned, the company expects to earn a revenue of $120 million in 2021. This top-line metric, however, is expected to swell to $1.43 billion by 2024 and to a whopping $4.12 billion by 2026.
