Canoo: Zombie Firm, Chapter 11 Filing Possible

Summary:

  • Canoo faces a critical cash situation with only a few quarters of runway left due to consecutive quarters of net losses and cash burn.
  • The company has made efforts to raise capital and reduce operational expenses, but the cash burn rate remains high, risking insolvency.
  • A reverse stock split will be required to maintain compliance with Nasdaq’s minimum listing rules and to make new stock sales more functional.

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A zombie firm describes a company that is able to maintain normal business operations despite being fundamentally insolvent. Any such firm is only able to remain a going concern by outside capital. Canoo (NASDAQ:


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