Canoo stock price crashed by over 70% on Tuesday after the electric vehicle company filed for bankruptcy, as we had warned many times before, here, here, and here. GOEV stock fell by over 72% following the Chapter 7 filing.
Canoo files for Chapter 7 bankruptcy
This bankruptcy was easy to predict as the company has incinerated cash for a long time. The most recent results showed that its revenue for the first nine months of 2024 was $1.5 million, as its net loss jumped to $112 million. Canoo ended the last quarter with less than $6 million in cash and short-term investments.
It also recently furloughed most of its workers as it sought to raise more cash, a highly difficult endeavor for a struggling company in a tough industry.
Canoo joins a long list of EV companies that have collapsed. Most recently, Fisker and Lordstown Motors filed for bankruptcy, ending their ambitions for being viable competitors to Elon Musk’s Tesla.
Canoo won’t be the last EV company to go bust. Faraday Future, a company that has been in the industry for so lon, could be the next casualty. The most recent numbers showed that it had $9,000 in revenue and a net loss of over $77 million. It lost $234 million in the first nine months of 2024.
A company losing that kind of money can continue operating for a long time if it has a good product and balance sheet. This is one reason why Rivian, a firm that loses billions each year has a chance for survival.
Faraday Future, Mullen Automotive, and Workhorse could be next
Faraday is different in that it sells a niche, is an overpriced vehicle, and has a weak balance sheet. It ended the quarter with just $7.2 million in cash and $80,000 in restricted cash. As such, it can only survive if it raises a lot of money and starts generating strong profits.
Workhorse Group is another EV stock that could crash this year because of its big losses. The third-quarter results revealed that its revenue dropped to $2.5 million from $3.02 million in the same period a year earlier. Its nine-month revenue was $4.4 million, down from $8.6 million.
The company’s net loss for the quarter was $25 million, and for the nine months was $80 million. Again, like Faraday, such a firm can’t operate for so long unless it raises substantial sums of money.
Mullen Automotive, a company that spent millions acquiring firms like Bollinger and Electric Last Mile Solutions could be the next casualty. The company ended the last quarter with just $3.5 million in cash and made a few million in differed revenue. As we wrote here, it is difficult to predict how a firm losing so much money could continue as a going concern.
The other companies that could file for bankruptcy because of their weak numbers are Phoenix Motor, Taiga Motors, and EZGO Technologies.
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