Canoo (NASDAQ:GOEV) has been a volatile EV stock in 2021. It’s rallying in November, but GOEV was declining in March and April. It’s seen gains of about 38% in the past 3 months, but it’s down about 52% over the past 12 months.

The volatility isn’t just news-driven, as it should be, but also emotion-driven, thanks to the Reddit frenzy and short-squeeze trading.

Canoo is a pre-revenue EV start-up; in my previous article, “Canoo Faces Several Key Risks, Making it Too Risky” I highlighted some of the key hurdles such as mounting losses, a lack of revenue, burning cash, poor fundamentals and a vague business plan strategy.

For me, those factors make this EV stock “too pricey, too risky and too uncertain”. I did not like the GOEV stock then and truth be told, I still don’t.

Canoo Business News

Investors were pleased to learn Canoo will accelerate the production of its first all-electric passenger van named the Lifestyle Vehicle (LV) in the fourth quarter of 2022 instead of 2023. But plenty of other factors combine to paint a bleak picture for GOEV stock.

Starting first with positive news, the EV maker has announced that its headquarters and R&D facility will be in Bentonville, Arkansas. The company selected Panasonic as battery supply partner and has expanded its Oklahoma partnership to include important strategic operations such as software development and customer support & finance centers. It will also receive $100 million in anticipated additional non-dilutive State and Local financial incentives.

On top of that, Canoo has expanded its workforce as it approaches the production phase. And after all the engineering design is complete and more than 500,000 miles of Beta testing have been made, the company will be launching into Gamma testing.

All this news goes to show that there is a determination to start generating revenue in 2022. The question is though is GOEV stock worth investing in now, waiting about one year for any significant improvement in key financial metrics?

Βusiness Model Changes: Good or Bad?

Canoo has made several changes to its business model over the past year. Unfortunately for Canoo, most of these changes seem questionable at best.

Let’s start with the decision to place any contract engineering services on hold to protect its intellectual property. Licensing its platform to other EV makers would be an extra source of revenue. The platform Canoo developed has many positive features that allow the development of new vehicles, faster and at a lower cost.

In my first article about Canoo,  questioned its “expertise” to sell this technology to other EV makers. Canoo is both a small and a new player in the hot EV industry. My point was that without any large scale of production, how can an EV startup claim and sell its know-how of intellectual property to other EV makers? It sounds unrealistic to me.

The decision to change its subscription program and make it optional, rather than a key source of sales, is also questionable to me. The top priority for any new company, especially for EV makers such as Canoo in need of capital, should be revenue.

The focus now has shifted to expediting production of GOEV’s first lifestyle vehicle. And a previously-announced strategic partnership with VDL Nedcar, a Netherlands-based company that was set to build 15,000 cars for Canoo by 2023, has since fallen through.

This is another major change for the business model, signaling either that Canoo feels very confident in what it is doing, or is confused. Time will tell in 2022 about the outcome of these decisions.

Turning to financials, has anything changed for the better?

Q3 2021 Results: Nothing as a Surprise

Canoo reported widening adjusted EBITDA and net losses in Q3 2021  of $85.8 million and $80.9 million respectively. By comparison, in Q3 2020 the reported figures for adjusted EBITDA and net losses were $20.1 million and $23.4 million respectively.

Cash used in operations was $180.6 million in Q3 2021, compared to $65.1 million in Q3 2020. Meanwhile capital expenditures in Q3 2021 reported were $74 million. The way I see it, Canoo most likely will turn soon to stock offerings to fund its operations. Why?

The answer is that GOEV is burning cash fast. In FY 2020 Canoo reported free cash flow of $114.17 million. In the first nine months of 2021, Canoo reported free cash flow of $254.6 million.

So what’s the bottom line on GOEV stock now? The fundamentals are uninspiring, but is it enough to buy the stock based on news about starting production earlier in 2022 than 2023?

The answer is no, as the stock is highly speculative now. Wait and see what happens in the coming quarters, as production will better determine the attractiveness of this EV stock. With no meaningful revenue, its market capitalization of $2 billion is too lofty.

Rising operating expenses and high capital expenditures will likely increase further to reach production in 2022, which raises a lot of concerns. I expect GOEV stock to be volatile, too risky for investors with a risk-averse investment philosophy. Finally, the question of when Canoo will reach profitability remains highly uncertain. There are just too many severe risks to ignore now.

On the date of publication, Stavros Georgiadis, CFA  did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Stavros Georgiadis is a CFA charter holder, an Equity Research Analyst, and an Economist. He focuses on U.S. stocks and has his own stock market blog at thestockmarketontheinternet.com/. He has written in the past various articles for other publications and can be reached on Twitter and on LinkedIn.