Shares of electric vehicle startup Canoo were sharply lower in early trading on Monday after the company said that it has agreed to sell discounted shares to raise $52.5 million.
The stock opened Monday at $1 per share, off 20%. It’s lost more than 80% of its value in the last 12 months.
Canoo said in a statement that it has entered into agreements with institutional investors to sell 50 million new shares, together with warrants that give the investors an option to buy up to 50 million more. The investors are paying $1.05 per share, and each share comes with one warrant that can be exercised at $1.30 per share.
Canoo didn’t name the institutional investors involved in the deal.
The deal price is a substantial discount, as Canoo’s shares closed at $1.25 on Friday. For current shareholders, the deal also means significant dilution of their holdings, as it will add between 50 million and 100 million shares to the company’s current outstanding share count of 356 million.
Canoo said in November that it was running low on cash and that it expected to raise funds by issuing new shares. It had just $6.8 million on hand as of the end of the third quarter.
Canoo said Monday that it will use the net proceeds of the offering for “general working capital purposes.” The company is expected to report its fourth-quarter results later this month.