Short Selling

Canoo Inc stock gets a short squeeze, surging by 115% in July

Canoo Inc (GOEV: US) is a company that designs and manufactures Electric vehicles. The California-based startup went public in 2020, via a merger with SPAC Hennessy Capital Acquisition Corp IV. As of the moment, GOEV’s stock price is standing at $3.85 while the current M Cap is $1.04 billion. 

Since its IPO, the stock has been a subject of short selling, as evidenced by 2iQ analysts previously covering GOEV in a report dated May’21. Many suspect the inclination for this to be because the Electric Vehicle market itself is in bearish mode. 

Short Selling and the Bearish mode

Currently, GOEV stock’s loan volume is at 40.884% of the total float. 

From February 7, 2022, onwards, the stock’s utilization rate has been a full 100% with a small dip of 96.79% on July 7. The shares on loan number 58,956,008 as of July 21. 

The EV industry is a priority considering many countries have taken the coal pledge. Ironically, many EV stocks are subjected to short selling because EV industries require years of funding, research, and development to keep them running. On another note, sales for Electric cars have risen significantly despite their production and availability lagging. 

Positive news that could switch modes

A more recent article published on July 20 pointed out that Canoo as well as meme stocks - Gamestop and AMC -  were three of the most shorted stocks that could go into a short squeeze. As predicted, the stock price fluctuated by 145.21%, when comparing the closing prices on July 01 and July 14. 

The main headline behind this price surge was most likely the July 12 announcement: Walmart placed an order for 4,500 delivery vehicles from Canoo. The deal reportedly came with an offer to buy as many as 10,000 electric vehicles from the manufacturer. On the announcement day, GOEV opened at $4.65, a value 96.20% higher than the previous day’s closing price. This is not the only development: Canoo was selected by the U.S. Army to provide an electric vehicle that would be used for analysis and demonstration. 

Previously, Canoo disclosed its Q1 results on May 10, 2022: The report quoted Canoo as having 17,500 current preorders with a projected worth of $750 million. On the downside, the GAAP net loss and comprehensive loss came to $125.4 million. The latter value was astoundingly larger than the mere $15.2 million GAAP net and comprehensive loss Canoo saw for Q1 2021.

As per a detailed Reddit post, Canoo stock was named as one of the most undervalued EV stocks in the current market. Early in the post, the writer claims that the main reason why Canoo is struggling is because of the overall market situation. But most anticipate GOEV’s current price to be its support level and the stock could rise well against short sellers.

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