California-based electric vehicle (EV) manufacturer Canoo Holdings Ltd. (NASDAQ: GOEV) stock went public through reverse merger on Dec. 22, 2020. Shares are just starting to solidify a base after collapsing nearly (-50%). The Company is still in concept mode as it puts together an infrastructure and starts production with full scale commercial production of its EVs planned for 2022-2025. The momentum in EV stocks led by Tesla (NASDAQ: TSLA) continues to surge as the market is hungry for U.S. EVs. In the absence of U.S. EV production, the momentum has carried over to Chinese EV makers led by NIO (NYSE: NIO) , Xpeng (NYSE: XPEV) and Li Auto (NYSE: LI). The Canoo uses a skateboard architecture and top hat design for expansive interior and storage functionality. The revenue model will also incorporate a subscription-based plan for consumers while commercial delivery vehicles will be sold. The Company also incorporates a unique marketing program called The First Wave where members earn Wave points for free merchandise and improved wait-list positions with feedback and referrals. Risk-tolerant long-term investors looking for exposure in a disruptive U.S. EV play can use opportunistic pullback price levels for exposure in Canoo shares.
SPAC Reverse Merger Plunge
Canoo came “public” on Dec. 22, 2020, under the new symbol GOEV from the previous special purpose acquisition company (SPAC) Hennessey Capital Acquisition Corporation IV old symbol HCAC. Shares collapsed from a high of $24.90 selling off for eight straight days to a low of $12.00 on Jan. 4, 2021, before putting in a bottom. This is the common reality of investing in SPACs ahead of the reverse merger and assuming the stock will gap and move higher immediately upon trading under the new symbol. The reality is the opposite as insiders cash in their shares into the liquidity. For patient investors, it provides an opportunity to get in a cheaper levels than the momentum chasers.
Canoo Models and Wave Points
Canoo has planned three EV models each targeting a different end user. The lifestyle vehicle is a spacious 7-seater van with a range of 280 miles and 28-minute charging capacity planned as a subscription-based offering in 2022. Canoo has a free membership program called The First Wave that consumers can join to get on the “waiting line” for the initial rollout of the first Canoo lifestyle vehicle. Members are called Wavemakers and have priority in line by earnings Wave points by providing feedback and successful new member referrals. Wave points also earn prizes ranging from Canoo hats to 3D printed models to Design books.
MPDVs and Sport
The high cargo class L3H3 multi-purpose delivery vehicle (MPDV) targets small businesses to large commercial fleets. It’s ideal for service technicians, independent contractors to last-mile and package delivery fleets, retailers and logistics companies. These are expected to rollout in 2023 for sales, not subscriptions. The sleek sport vehicle is modeled to complete with the likes of Tesla but targeted for 2025 rollout.
Theme and Concept
The Company is in the early stages of rollout. The design is unique but how the EV market evolves in the next two-years is a wild card. The Company will have to build its brand as it plans to implement a direct-to-consumer model meaning no dealers or middlemen. However, the subscription model has been rumored to cost as much as $900 per month, which covers all expenses including maintenance, charging fees, no registration with MVA, batteries and no contractual obligations like a lease. In fact, the Company claims its model is 40% cheaper than a traditional automobile lease. The subscription has no enrollment fees or long-term commitments like a lease. It’s designed for convenience and a frictionless experience.
GOEV Opportunistic Pullback Levels
Using the rifle charts on the weekly and daily time frames provides a precision near-term view of the landscape for GOEV stock. The weekly rifle chart is in a make or break as the uptrend stalls with the 5-period moving average (MA) sits at the $17.18 Fibonacci (fib) level and the weekly 15-period MA sits near the $13.26 fib level. The weekly stochastic has crossed down as GOEV has tagged both the weekly 5-period MA and the 15-period MA as chops in the middle around the daily market structure low (MSL) trigger at $14.42 and below the daily market structure high (MSH) trigger at $18.91. The daily rifle chart also has a make or break but with a stalled downtrend with a rising 5-period MA near the $14.06 fib and a daily stochastic mini pup. If the daily stochastic mini pup can cross up through the 20-band, then a channel tightening to the daily 15-period MA at $16.12 before pulling back to the rising daily 5-period MA. Prudent investors can look for opportunistic pullback levels at the $14.42 daily MSL trigger, $14 fib, $13.26 fib, $12.84 fib and the $11.60 fib. then the lower price pullbacks may test with the best overlapping pullback levels at the $11.46 overlapping fib. Upside trajectories range from $16.73 up to $23.26.
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