Canoo Inc. Bankruptcy & The Zero-Emission Revolution

Canoo, Inc. (GOEV) declared Chapter 7 bankruptcy on January 21st. As part of the Zero Emission Vehicle Transition nearly 80 companies are currently covered. With GOEV’s declaration of bankruptcy, this brings the total to approximately 20 percent of this total that has now either declared bankruptcy or been acquired in a distressed state.

In addition to the 20 percent that is now gone, another 16 percent or so have already disclosed a going concern in their financial filings. This means that nearly 40 percent of these companies have gone bankrupt or are still at risk of doing so.

This is why I decided to cover the universe of global automotive OEMs and other technology innovators related to autonomous vehicles and advanced air mobility. Despite heightened expectations, many of these companies were doomed right from the start. Equally important are the President Trump Administration’s focus on tariffs with Canada and Mexico that already has the automotive industry reeling.

Each company has multiple attributes to help retail investors navigate the challenges that the zero-emission push by the previous administration has generated. This includes stock price performance trends, bankruptcy risk as evidenced by going concern disclosures, and recommendations on actions.

While the core focus and strategies for the Investor Cornerstone+ portfolio under management are to identify the best aggressive growth investment opportunities, the analysis tools above also be used to identify candidates for short-term trading activities. As the portfolio owns Rivian Automotive, Inc. (RIVN), it is also equally important to monitor the competition's growth in zero-emission vehicles. Lastly, while Chinese zero-emission vehicle OEMs have come on the scene, their financial transparency is questionable at best and are better suited left alone, but are still monitored to fully encompass the industry.

Based on all the uncertainties that have come to fruition and based on where the zero-emission landscape stands today, I am not very optimistic regarding the future potential of this industry as I don't see legacy OEMs or most newer entrants being leaders. I believe that both Tesla, Inc. (TSLA) and RIVN will continue to be and end up being key leading innovators that take this industry forward. The Trump Administration's rollback of prior administration's zero-emission federal programs will better balance leading innovators versus legacy peers.

Disclosure: The Investor Cornerstone+ portfolio owns RIVN and does not own any of the other companies mentioned in this blog, nor is there any desire or intent to take any action to buy any other companies directly, to purchase calls, or to purchase puts for the foreseeable future.