Walmart & Canoo Set To Take On Amazon & Rivian

Earlier this week, Walmart made headlines by placing a huge order for thousands of Canoo electric vans to be used for last mile deliveries and transport – but that was just the beginning of a tsunami of good news for Canoo fans shareholders, as both NASA and the US Army have moved forward with orders.

NASA announced plans to use Canoo EVs as last-mile transporters to get astronauts out to the launch pad. That’s not a huge order in and of itself, of course, but one that is highly visible, and highlights the small vans’ big cargo-hauling capabilities (8 people, consisting of four astronauts, three crew support staff, a driver, and an assortment of duffels and tool kits).

NASA Electric Transport for Artemis Program

“But, wait,” as the great Billy Mays might say, “there’s more!” It seems as if Walmart is entertaining even bigger plans with Canoo. According to the terms of the EV purchase agreement, made public after a recent SEC filing, it seems a Warrant Issuance Agreement was also included, which gives Walmart the option to exercise the purchase of of 61,160,011 shares of fully paid and non-assessable shares of Canoo common stock at a share price of $2.15. The SEC filing reads:

The Warrant has a term of ten years and is vested immediately with respect to 15,290,003 shares of Common Stock. Thereafter, subject to the stockholder approval described below, if applicable, the Warrant will vest quarterly in amounts proportionate with the net revenue realized by the Company and its affiliates from transactions with Walmart or its affiliates under the EV Fleet Purchase Agreement or enabled by any other agreement between the Company and Walmart, and any net revenue attributable to any products or services offered by Walmart or its affiliates related to the Company or its affiliates, until such net revenue equals $300 million, at which time the Warrant will have vested fully.

Under the Warrant Agreement, the Company shall, as promptly as reasonably practicable following the date of the Warrant Agreement and, in any event, no later than the Company’s 2023 annual meeting of stockholders, convene and hold a meeting of stockholders to consider and vote on the issuance of the Warrant in respect of any shares of Common Stock in excess of 53,852,492 shares (which represents more than 20% of the Company’s outstanding Common Stock as of the date of the Warrant Agreement), pursuant to the applicable rules of the NASDAQ Global Select Market. In the event that stockholder approval is not obtained, in lieu of any shares which would have been issued to Walmart, the Company is required to pay to Walmart an amount in cash equal to the product of: (i) the excess of (x) the 30-day volume weighted average price per share as of the day immediately preceding the applicable exercise date and (y) the exercise price, times (ii) the number of shares that would have been issued at such applicable exercise date if stockholder approval had been obtained.

Walmart’s investment in the startup van company is quite a bit smaller than Amazon’s investment in Rivian, but it seems like Canoo is trending up whereas Rivian is still trying to recover from a public image that’s been tarnished by its tumbling stock prices. Canoo stock (NASDAQ: GOEV) is trading at a tick over $4.60 as I type this, with even more upward pressure on the stock coming from the next big piece of Canoo news that came out this week: Canoo is in the Army now!

Canoo has been awarded a contract from the US Army to supply an electric vehicle to test the platform across a variety of service arenas, from on-base transport and cargo-hauling to armored transport (if the platform proves up to the challenge).

“As an American company based in the heartland, it is an honor to be selected by the US Army,” said Tony Aquila, Investor, Chairman & CEO at Canoo. “This is another opportunity to prove our proprietary technology – which is customizable and adaptable for multiple use cases and special environments.”