July 12 (Reuters) – Walmart Inc (WMT.N) has signed a deal with Canoo Inc (GOEV.O) to buy 4,500 electric vehicles as part of the US retailer’s goal of reaching net-zero emissions by 2040, the companies said Tuesday.
The deal, the financial terms of which have not been disclosed, also gives Walmart an option to buy up to 10,000 units as it electrifies its supply fleet.
Canoo shares have more than doubled in early trading, with the news sparking interest in the company from retail investors and making it one of the most talked about stocks on Stocktwits trading forum.
According to Roth Capital analyst Craig Irwin, the move is solely focused on retail purchases, as shorts don’t expect the deal to reduce cash burn or projected funding needs.
“This order was somewhat anticipated, but it is a nice step. It will be exciting to see those vehicles driving in the DFW (Dallas Fort Worth) area,” added Irwin.
The short stake in Canoo was nearly 13% of the outstanding shares, research firm S3 Partners said, adding that the jump cut mark-to-market earnings for the shorts by $58 million to about $100 million.
The stock has lost nearly 70% of its value this year, as of last close, amid technology stock sell-offs and concerns about Canoo’s access to capital.
The deal comes as companies including FedEx Corp, Amazon.com Inc (AMZN.O) and United Parcel Service Inc (UPS.N) promise to shift their delivery fleets to EVs.
The agreement between Canoo and Walmart also includes the EV startup’s all-electric Lifestyle Delivery Vehicle (LDV). Canoo expects to start production of the LDVs in the fourth quarter of 2022, according to the statement.
In June, Walmart said it was expanding transportation pilots with electric, hydrogen and natural gas-powered vehicle manufacturers, including Cummins Inc. (CMI.N) and Daimler Trucks (DTGGe.DE) Cargo ship.
The retailer has reserved 5,000 electric vans with General Motors’ (GM.N) commercial EV business, BrightDrop.
Reporting by Ann Maria Shibu and Akash Sriram in Bengaluru and Ben Klayman in Detroit; Editing by Anil D’Silva and Aditya Soni