Go EV Take Her Go! EV And the company canoe, uh, just suffered a 28 decline on the stock charts and this is in pre-market Here it looks like the company has registered uh, 20 or 52.5 million shares uh via a direct offering to institutions to help the company stay afloat. This is 52.5 million, uh, dollars worth of shares actually. But it's pretty dang close because it is. Yeah, it's 50 million shares at a buck 05 a share.

So again, 50 million shares registered a bucko five a share. The stock was trading at 125 as of the closing date on Friday. It's now, uh, looking like after this, uh, registration, uh, at a discount of about 16 percent. The stock is now trading down about 28 to 30 percent because of the dilution uh, that uh that these additional 50 million shares bring, but also at the lower valuation is really a sign of stress for the company, right? So this is no surprise.

We're seeing a lot of companies suffer massive stress in the auto space right now. This is probably the absolute worst time that you could have a financial crisis for. uh, for the EV makers. They go through a lot of expenses to try to ramp their businesses.

We know that Rivian loses 271 dollars of gross profit. so in other words, gross loss of 271 for every 100 of Revenue they have. So in other words, they're massively negative on gross profit. When Tesla was manufacturing the same amount of vehicles about 7, 000 Vehicles Tesla actually had a gross profit not including EV credits of twenty dollars.

So in other words, they sell 100 bucks of Revenue Tesla actually made 20 bucks Rivier and makes a hundred bucks of Revenue They actually spend 271. That's gross profit I'm not talking about net Both of the companies at that stage lost money net. but the point is, the cash burn at a lot of these companies. Whether it's Lucid Arivian, or Go EV or Just or Canoe are absolutely insane.

This there's a reason why I made a video about two months ago talking about the coming bankruptcy of Rivien and Lucid and basically I went through their balance sheet and said look, these companies are going to have to raise a crapload of money to stay alive and there's a reason why. On this channel without fail and consistently I have been warning that you want to stay away from profitless companies I Understand that when the ocean Rises and the stock market rallies up, all companies are going to do very well and you're going to see big rallies in companies uh, that that are money losing companies like for example, Bill.com and they'll rally. But then what will happen when they actually have to raise money or their earnings come out? They plummet. Bill.com shot up from about 91 bucks to uh to about a hundred and thirty two dollars.

I Mean think about that 132 divided by 91. That's about a 45 share gain. What happened? they reported earnings and then all of a sudden the stock fell 25 to 30 percent, which when you fall by that amount off of a higher number could potentially eradicate that full 45 gain. It's not one to one one.

Do the math and you'll see what I mean. But basically the Stock's basically right back to 91.92 dollars. So you got to be very very careful of money losing companies. Especially companies like Canoe.

Look at Canoes. Revenue Folks look at Canoes revenue on their own income statement for the three months ended 2022 or 2021. Oh wait, it's blank. That's because there is no Revenue They have no Revenue They just have R d expenses in SG A It's basically just a business that's burning money at this point in the three months ended.

September 30th they burned 117 million dollars with no Revenue In the nine months ended. September 30th they burned 407 million dollars with no Revenue That's on their revenue statement and there is no Revenue So it should literally just be an expense statement. Usually we call it the income statement, but it should be just the expense statement because there is no income. When you look at actual operating cash expenses, you're at 329 million dollars of operating expenses.

This is the cash flow statement and purchases of plant property and Equipment of 88 million 88.8 million. And this is in the nine months ended September 30th You're burning 420 million dollars in nine months. Which means you're burning about 50 million, dollars a month just to survive. So let's write that down for a moment.

Okay, cash burn at Goev. 50 million dollars per month. It's a pretty old big cash burn, right? Well, how much cash do they have? Well, that's easy because it's all public. You go over here to the balance sheet.

Well, oh dear. 6.8 million dollars in cash? Ooh a restricted cash. Four million dollars. Ooh, that's 10 million dollars of cash.

How much inventory do you have? Oh 1.2 million. So like none. Got some prepaid expenses, but those don't help you. How about liabilities? How much money? And like, how many bills do you have due within the next 12 months? Oh good lord.

Accounts payable of 96 million dollars, accrued expenses of 74 million dollars. Oh yikes. You have about 160 million dollars of debts due, 170 ish. closer to 170 million dollars of debts due within the next 12 months.

So you have payments due of 170 million dollars. Do within 12 months, you're burning 50 million dollars a month saying alive and you just at a basically 16 discount row. or tried to raise 50 million dollars in panic money. This company is going bankrupt.

This is absolutely bad There is. There is no hope here. and so it's no surprise that the stock is down now 32 percent in the pre-market This is a zombie company they have no hope of. Revenue And it's no surprise that the company has plummeted now.

They had a lot of Hope when they were priests back right pre-merger There was a lot of opium for them. A lot of opium. but boy oh boy. 2022 was not a year to bet on on some of these companies.

There's a reason why: I repositioned in January of 2022 and got out of every single money losing company I Do not hold a single share of a money losing company right now at least I Don't believe I do I'm pretty sure I don't I'm pretty sure I sold everything I Don't know. maybe there's like one leftover share somewhere, but the point is, you don't want to be in a money losing company during a recession. And if that's not blatantly obvious, uh, and you know why you don't want to hold a money losing company in going into a recession. Hopefully this video makes that more obvious.

And so I think there's a really big risk in investing in companies like for example: Roku that loses money hand over fist I Understand, they've gone up a lot recently. Look at this. They traded at a low at the end of the year at 38 bucks. Now they're trading at 61 bucks.

It's insane, right? It's intoxicating because the stock is up 60. That's great. But guess what that does? All it does is prop the stock up so that when they need to raise money to survive, they end up diluting you and you're the bag holder. That's what you got to be careful of on these suckers, you become the bailout mechanism in a recession.

That is the point of the stock market. The point of the stock market is to provide liquidity for these companies. And guess what? In this case, the company didn't even do this the share sale on the open market because they probably realized they couldn't get it done on the open market. They couldn't dump 50 shares on the open market 50 million shares.

So instead what they do, they sold it to an institution that was dumb enough to take it at a buck five a share. and now the stock is trading for 86 cents. So the losers who just made that bet thinking they were getting a 60 to 16 discount for some reason think it's actually smart to walk into a bankrupt company and bail them out Doesn't make any sense. So I I Don't know I Don't know what other kind of handshakes or or what what kind of shakes they got, but this sounds like a terrible deal and uh, this is a very, very big risk.

When you're looking at investing in a recession, you've got like, even if even if a company misses revenues and their guidance isn't as good, what you want in a recession is a company that's kind of like Apple. or Starbucks Okay, Apple or Starbucks what are they telling you? They're like, look, yes, growth is slow. Uh, it has slowed. We're trying to recover.

We have issues because of Supply chains in China and their problems. But guess what? we're gonna get through it. Not only are we going to get through it, but guess what, we're going to increase our dividends. We're going to increase our BuyBacks and we're going to use this as an opportunity.

Whereas you look at a company like Lucid and they're like yeah, we're gonna raise 1.5 billion dollars because we need to be able to survive. Or you look at a company like oev and it's like yeah, we need to panic, sell 50 million dollars worth of sale shares because we're burning 50 million dollars a month in cash firm and we've got 172 million dollars of debt that's due within the next 12 months. We got a lot of bills sitting on our desks and we've got no money and we have no revenues. So I I I I Don't know how much more obvious you can make it that in a recession you want to stay away from money losing companies.

but I don't know. For some reason people keep speculating on these because uh, you know I think they have the greater potential of a greater run out. but boy, you better play him as a trade. But I would not want to hold any money losing company right now.

That's my stick on money losing companies, huh? Gosh, it always gets all worked up over these man. I'm getting angry like why would you have your money in this? It doesn't make sense. The financials are so terrible and look I I I'm a fundamentalist at heart. Okay I do fundamentals.

That's what I do man I do fundamentals. That's it I I I I Like look sometimes I'll do trades, you know I shorted the dollar I thought at a great time uh I've got great trade ideas I don't pull the trigger on all the trade ideas I have I I I plan to more. especially since everybody around me once wants me to trade more because I do have a lot of ideas. Uh, yeah, but but the point is at heart.

I'm fundamental driven. Uh, and that's just because. I You know when when I started with with real estate, it was all about the fundies. Folks, It's you do not overpay for a property ever.

That is the rule you don't overpay for Stuff fund these fundies over everything.