Embattled electric vehicle (EV) manufacturer Canoo (NASDAQ:GOEV) gave its investors something to cheer about with a compelling agreement with NASA’s Kennedy Space Center in Florida. Earlier this week, management announced that it delivered on time three crew transportation vehicles (CTVs) to the aforementioned center. Moreover, the news sparked interest among retail traders in a short squeeze in GOEV stock. Nevertheless, prospective investors must take into consideration the underlying risks.
On paper, the NASA deal drives fundamental credibility for Canoo. According to the accompanying press release, the CTVs will transport the astronauts of the upcoming Artemis lunar missions to the launch pad. From NASA’s website, the undertaking “…will land the first woman and first person of color on the Moon, using innovative technologies to explore more of the lunar surface than ever before.”
Given the high-profile initiative to reestablish U.S. dominance of space — along with the incredible upside potential of the space economy — it’s no wonder that GOEV stock jumped on the news.
“We are thrilled to be a part of the Artemis missions and to deliver NASA’s first zero-emission built for mission crew transportation vehicles,” says Canoo Chairman and CEO Tony Aquila. “It’s a very proud day for Canoo and all of our partners who worked so hard to ensure we perform our part to transport the astronauts for the first nine miles of every launch.”
As an organic benefit, the CTV may help underscore the roominess and practicality of Canoo’s flagship Lifestyle Vehicle. In addition, the announcement helps market the modularity of the underlying skateboard platform.
GOEV Stock Presents High Risks Despite Massive Surge
Understandably, retail traders targeted GOEV stock for sustained upside, in part because of its short-squeeze potential. According to Fintel, the short interest of GOEV stands at 12.47% of its float. Also, according to the data aggregator’s proprietary Short Squeeze Score, it hits 71.77 out of 100. Higher numbers indicate a greater risk of a short squeeze materializing.
Also, options sentiment for GOEV stock is very bullish at the moment, with the put/call ratio sitting at 0.16. Since puts generally represent bearish wagers, ratios below one indicate optimism. Also, options flow data indicates a significant amount of bought calls and sold puts during the Friday session. Both transaction categories imply bullish sentiment.
However, investors need to be extremely cautious about GOEV stock. For one thing, NASA-related deals don’t necessarily guarantee sustained upside. Case in point is lunar access service provider Intuitive Machines (NASDAQ:LUNR). InvestorPlace readers may recall that LUNR soared on its public market debut (as a special purpose acquisition company or SPAC) earlier this year based on its Artemis deal.
Today, LUNR is up less than 2% on a year-to-date basis (YTD). For GOEV stock, while it’s up 25% on Friday, it’s still down more than 44% YTD.
Finally, investors can’t ignore Canoo’s financial woes. In particular, it only has about $7 million in cash and cash equivalents as of the first quarter of 2023. Therefore, it must figure out a way of making money, and soon.
Why It Matters
Interestingly, among Wall Street analysts covering GOEV stock within the past three months, it carries a unanimous strong buy view. Moreover, the experts’ price target lands at $4.50, implying gargantuan growth of 550%.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.