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Canoo has sold 50 million shares at $1.05 apiece, the EV startup said on Monday.
Courtesy of Canoo
The life of an EV startup has gotten a lot more difficult these days with interest rates rising and competition getting tougher.
The changing environment has made cash more valuable and harder to collect. Some EV startups, however, are still able to raise funds.
There are a couple of examples in the last week: Canoo (ticker: GOEV) and Lotus Technology.
On Monday,
canoe
announced a sale of 50 million shares, bringing nearly $53 million to the company’s coffers. Buyers of the new shares also get a mandate to purchase an additional share at $1.30. The warrants are exercisable in six months and expire five years from the date of first exercise.
canoe
raised about $600 million by merging with a special purpose acquisition company, or SPAC — the deal closed in late 2020. The startup ended the third quarter with about $20 million in cash. The fourth quarter numbers will be released on February 27th.
In midday trading, the shares fell 11.8% to $1.11. THE
S&P 500
AND
Nasdaq Composite
decreased by 0.6% and 0.3% respectively.
More cash is good news, but the trading moves Canoo’s share price in line with the price of the new share sale. The price paid was $1.05 per share. The stock closed Friday at $1.25.
Canoo is raising funds at depressed stock levels. The shares are down about 81% over the past 12 months and about 95% off their all-time high of more than $20 a share.
That price was hit in late 2020, when investors were more optimistic that EV startups could gain market share. Since then, traditional automakers have started investing more heavily in EVs, and investors have learned that it takes a lot of money to launch new car platforms — billions, not the hundreds of millions several EV startups raised in 2020 and in 2021.
Rising interest rates have also made it harder for startups that don’t generate free cash flow to raise more capital. However, some EV companies are still able to raise money, as long as they have the right backers.
Lotus Technology, for example, is raising funds and becoming a publicly traded company by merging with
L Catterton Asia Acquisition Corp
(LCAA), a SPAC.
Chinese automakers Geely and
NIO
(
NIO
) are backers of Lotus and will still own about 90% of the company when the merger is complete. Lotus is expecting nearly $300 million from the deal, which was announced last week.
Lotus, founded in 1948, is far ahead in development compared to other EV startups. It supplied its Elise chassis for the original Tesla roadster (TSLA) and its SUV, the Electre, is expected to hit Chinese streets in Q1 2023. After that, the EV will be launched in Europe.
Since the Lotus SPAC merger was announced, L Catterton parts are still trading in the $10 range. Lotus’ value hasn’t changed much since news of the deal: about $5.4 billion.
For an EV startup, Lotus’ market cap is large. Canoo’s is 400 million dollars.
fisker
(FSR), which is also launching its first electric vehicle this year, has a market cap of $2.5 billion.
Polished
(LCID) e
Rivian Automotive
(RIVN) are the two EV startups with the highest valuations. The pair have a market cap of $20 billion and $18 billion, respectively. And they also have more money than other EV startups.
Email Al Root at [email protected]
