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What happened

Shares of beleaguered electric vehicle (EV) start-up Canoo (NASDAQ:GOEV), which got torpedoed after reporting a big $90 million loss in March, are sinking even lower today, down 8% in 2:20 p.m. EDT trading.

You can blame Bank of America (BofA) for that.

Image source: Getty Images.

So what

In a note covered today on StreetInsider.com, investment bank BofA initiated coverage of Canoo stock with an “underperform” rating (i.e., sell), warning that it doubts the company’s “ability to execute in a timely fashion” given its “several significant pivots/changes” in its business model “recently announced.”

With multiple start-ups all vying to grab a toehold in the market at present, the EV industry is “fiercely competitive,” opines BofA. And despite what headlines might be telling you, EV manufacturers are still making only slow progress at displacing traditional manufacturers of internal combustion vehicles.

Now what

In this situation, the banker warns that competition is tough in business-to-business sales but even tougher in Canoo’s targeted “subscription business” selling electric cars directly to consumers. With success far from a sure thing, and Canoo’s trailing sales still well short of even $3 million a year, BofA values Canoo stock at only $6 a share — suggesting that even after today’s sell-off, there’s another 22% worth of downside risk in this stock.  

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