Investigation of Canoo, Inc.
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Canoo Inc. (GOEV) Misled Investors Regarding its Business Model
Canoo Holdings Ltd., an electric vehicle company, became a public entity via merger with Hennessy Capital, a special purchase acquisition company, on December 21, 2020. The companies announced the merger on August 18, 2020, filing its Registration Statement on Form S-1 with the SEC the same day. The Registration Statement touted Canoo’s engineering and technology services, noting that “[t]his business offers a unique opportunity to generate immediate revenues in advance of the offering of our first vehicle and our current pipeline in this area is supportive of a projected $120 million of revenue in 2021.” The Registration Statement noted that Canoo’s “[c]ontract engineering services offer a separate revenue stream” and that its engineering services were considered a “positive factor” supporting the merger.
On March 29, 2021, after the market closed, Canoo revealed the Company would no longer focus on its engineering services line, which had been touted in the merger documents just three months earlier and formed the basis of Canoo’s growth story. Discussions during the press conference also revealed that Canoo had decreased its focus on its plan to sell vehicles to consumers through a subscription model, and that contrary to prior statements Canoo did not have partnerships with original equipment manufacturers and no longer engaged in the previously announced partnership with Hyundai.
On this news, Canoo’s stock price fell $2.50, or over 21%, to close at $9.30 per share on March 30, 2021.