Updated April 2nd, 2024 at 12:54 IST

Canoo's disappointing 2024 revenue forecast sparks sharp decline in shares

The EV industry is facing headwinds as higher interest rates dampen consumer interest, which are typically more expensive than traditional vehicles.

Reported by: Business Desk
Canoo revenue forecast | Image:Canoo
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Canoo revenue forecast: California-based electric vehicle startup Canoo's 2024 revenue forecast falls short of expectations, triggering a decline in its shares during extended trading on Monday. The disappointing forecast reflects broader challenges in the electric vehicle (EV) market, where demand has slowed, impacting both startups and major automakers' investment plans.

Canoo's shares plummeted by 38 per cent in extended trading following the announcement. The company also expressed concerns about its financial stability, warning for the eighth consecutive quarter about its dwindling capital and the need for additional funding to sustain its operations.

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The EV industry is facing headwinds as higher interest rates dampen consumer interest in EVs, which are typically more expensive than traditional gasoline-powered vehicles. This trend has led automakers, including market leader Tesla, to slash prices in a bid to stimulate demand.

Canoo, based in Texas, supplies electric delivery vans to Walmart and crew transportation vehicles to NASA. The company has been grappling with financial challenges, initially warning investors about doubts regarding its ability to remain a going concern in 2022. Since then, Canoo has been raising capital to support its production efforts.

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During a post-earnings call, Canoo's CFO Greg Ethridge stressed the company's commitment to accessing additional capital through debt and non-dilutive means in 2024. However, with uncertain demand and several EV startups shuttering operations, investors have grown increasingly cautious, making it challenging for firms like Canoo to raise funds.

The struggles in the EV market were further exemplified by Fisker's recent announcement that talks with a large automaker for a potential deal had collapsed. Additionally, the New York Stock Exchange revealed plans to delist Fisker's shares due to "abnormally low" price levels.

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Canoo's revenue forecast for full-year 2024 fell way below analysts' expectations, with the company expecting revenue to range between $50 million and $100 million, compared to analysts' estimates of $152.5 million. Despite reporting a narrower net loss compared to the previous year, Canoo's challenges underscore the uncertainties plaguing the EV industry.

(With Reuters inputs.)

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Published April 2nd, 2024 at 12:54 IST