Canoo shares more than doubled on Tuesday: here’s why

Shares of Canoo Inc (NASDAQ: GOEV) more than doubled this morning after Walmart Inc (NYSE: WMT) said it will buy 4,500 electric delivery vans from the Bentonville-headquartered automotive startup.

Walmart can buy a total of up to 10,000 LDVs

The agreement is in line with Walmart’s commitment to zero-emissions by 2040. The retail behemoth has the option to later purchase another 5,500 all-electric vans from Canoo that it’ll use to fulfil online orders.

Canoo is expected to begin production at its Oklahoma factory in the final quarter of 2022 and the “Lifestyle Delivery Vehicle” will likely be on the road in 2023. But the press release also added:

The companies plan to kick-off advanced deliveries to refine and finalise vehicle configuration in the Dallas Fort Worth metroplex in the coming weeks.

Canoo was running out of cash

The “definitive agreement” with Walmart offers a much-need relief to the EV startup that reported $125 million in loss for its fiscal Q1 in May, raising doubts about its future. This morning, though, CEO Tony Aquila said:

Our LDV has turning radius of a small passenger vehicle on parking friendly, compact footprint, yet payload and cargo space of a commercial delivery vehicle. This is the winning algorithm to seriously compete in last mile delivery race globally.

Canoo went public via a SPAC merger in late 2020. Despite a sharp increase in the stock price today, shares are still down roughly 50% versus the start of 2022.