Canoo has sold 50 million shares at $1.05 a piece, the EV startup said Monday.
Courtesy Canoo
The life of an electric vehicle startup has become much harder these days as interest rates rise and the competition gets stiffer.
The changing environment has made cash more precious, and more difficult to raise. A few EV startups, though, are still able to raise money.
There are a couple of examples within the past week: Canoo (ticker: GOEV) and Lotus Technology.
On Monday,
Canoo
 announced a 50 million-share sale, bringing in almost $53 million into the company’s coffers. Buyers of the new stock also get a warrant to purchase an additional share at $1.30. The warrants are exercisable in six months and expire five years from the initial exercise date.
Canoo
raised about $600 million by merging with a special purpose acquisition company, or SPAC—the deal closed at the end of 2020. The startup ended the third quarter with about $20 million in cash. Its fourth-quarter numbers are due out on Feb. 27.
In midday trading, shares were down 11.8% to $1.11. The
S&P 500
and
Nasdaq Composite
were down 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 stock sale. The price paid was $1.05 a share. The stock closed Friday at $1.25.
Canoo is raising money at depressed stock levels. Shares are down about 81% over the past 12 months and down about 95% from an 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 auto makers have started investing more heavily in EVs and investors have learned it takes a lot of money to launch new car platforms—billions, not the hundreds of millions that several EV startups raised in 2020 and 2021.
Rising interest rates also have made it tougher for startups that don’t generate free cash flow to raise more capital. Some EV companies are still able to raise money, though—as long as they have the right backers.
Lotus Technology, for example, is raising money and becoming a publicly traded company by merging with
L Catterton Asia Acquisition Corp
(LCAA), a SPAC.
Chinese auto makers Geely and
NIO
(
NIO
) are Lotus backers and will still own about 90% of the company when the merger is complete. Lotus expects almost $300 million from the deal, which was announced last week.
Lotus, founded in 1948, is much farther down the development road than other EV startups. It provided its Elise chassis for the original Tesla (TSLA) roadster and its own SUV, the Eletre, is due to hit Chinese roads in the first quarter of 2023. The EV will be launched in Europe after that.
Since the Lotus SPAC merger was announced, L Catterton spares are still trading in the $10 range. The value of Lotus hasn’t changed all that much since word of the deal—about $5.4 billion.
For an EV startup, Lotus’ market capitalization is big. Canoo’s is $400 million.
Fisker
(FSR), which is also launching its first EV this year, has a market cap of $2.5 billion.
Lucid
(LCID) and
Rivian Automotive
(RIVN) are the two EV startups with the biggest valuations. The pair have market caps of $20 billion and $18 billion, respectively. And they also have more cash than other EV startups.
Write to Al Root at allen.root@dowjones.com
Credit: marketwatch.com