This has been a tumultuous year for enterprise electric vehicle (EV) companies, with most struggling to sell cars — while some, like Lordstown Motors ( RIDEQ ), have simply gone out of business. Multiple EV stocks, including Rivian (RIVN), Lucid Motors (LCID), Nikola (NKLA) and Fisker (FSR), all fell to record lows at various points this year.
While most of these names moved off their lows, Fisker hit a new low of $1.76 just earlier today. The recent slide in FSR is more of a company-specific issue, beyond the broad sell-off in entry-level EV names we’ve seen over the year. Here’s why Fisker’s stock is falling, and whether you should buy or sell the stock near its record lows.
Why Is Fisker Stock Falling?
There are a few main reasons why Fisker stock is down and has lost more than 60% of its value in the last month.
- Departure of key personnel: Over the past month, Fisker has seen the departure of one chief technology officer and two chief accounting officers. The latter is particularly worrying, as Florus Beuting – who succeeded John Finnucan as CAO – resigned in less than a month.
- Delay in Q3 earnings and 10Q filing: The departure of CAOs in quick succession is rarely good news for a company, no matter how much it is made about “personal matters”. To make matters worse, Fisker also delayed its Q3 earnings and 10Q filing, citing the “identification of material weaknesses in internal controls.”
- Fisker finally reported a wider-than-expected loss for the third quarter, while also cutting its 2023 production guidance to between 13,000-17,000 units. The company joined other startup EV companies like Polestar ( PSNY ) and Lucid Motors, which also cut their production guidance for 2023.
While most startup EV companies struggle with weak demand, and some still face supply bottlenecks, Fisker attributed its weak results to delivery and service infrastructure issues that negatively impacted its ability to ship cars to customers.
Fisker’s Production Strategy
Fisker’s logistical problem is due to its manufacturing strategy. For its Ocean SUV, it partnered with automotive supplier Magna – which also makes cars for Mercedes-Benz and BMW and has built a reputation for its quality. However, Fisker ran into problems shipping these vehicles from Austria to other markets in Europe and the United States
For its next models – Pear and Alaska – Fisker is looking to partner with Foxconn. Notably, while Foxconn is best known for producing most of Apple’s ( AAPL ) iPhones, it has also gotten into EV contract manufacturing. The company bought Lordstown Motors’ Lordstown manufacturing facility and also formed a joint venture with Saudi Arabia to produce EVs in the oil-rich kingdom.
FSR Supply Forecast: Analysts Turn Bearish
This month, several analysts lowered their target price on Fisker stock as Wall Street grows wary of the startup EV company. These include former Fisker bull John Murphy of BofA Securities, who put his rating on the stock “under review.”
Overall, analysts have a consensus rating of “Hold” on Fisker. Four analysts rate it a “Strong Buy”, 2 a “Hold”, and the remaining 3 rate it a “Strong Sell”. Meanwhile, amid the recent price collapse, Fisker is trading well below its most pessimistic target price of $3.00 — while the average target price of $6.69 is a 271% premium to current prices.
Is Fisker Stock a Buy or a Sell?
Fisker doesn’t have the strongest balance sheet in the startup EV space, and had $625 million in cash and restricted cash at the end of September. It raised $150 million in Q3 — and while its cash needs aren’t as high as companies that manufacture cars at its facility, it may still need to make additional rounds of capital raises.
Here are the other factors that investors should consider before buying FSR:
- Fisker has a reasonable product offering with a strong focus on sustainability that could resonate with a section of the market. It also offers solar roof charging, which it says can deliver up to 1,500 miles of driving range each year.
- Fisker’s first model received decent reviews from auto analysts, and MotorTrend calls the Oceano a “nice job for a first-rate product from a startup,” even as it admitted to “some bugs that still need to be worked out.” While the review may not match the raves that Lucid or Rivian models have received, it is still much better than some of the other players, such as VinFast (VFS).
- Fisker’s vehicles also offer a good range in their class, and if its upcoming base model Ocean Sport — which it’s looking to sell for around $40,000 — can gain traction, the company could see better days ahead. The company’s cars don’t currently qualify for the $7,500 EV tax credit in the US, but if it can partner with Foxconn to produce upcoming models in the country, they would be eligible.
All this said, the EV turnaround is likely to intensify in the coming months, and many startup EV companies—especially those with “me-too” product offerings and weak balance sheets—may simply fade into oblivion.
As for Fisker, while it may not be in the same league as names like Rivian, which has a much stronger product portfolio and billions of dollars of cash on the balance sheet, it still looks better than those startup EV companies looking at the balance sheet. . verge of collapse.
The recent CAO changes and admission of weakness in its internal financial controls add another layer of risk for FSR investors. However, after the sale, I believe Fisker stock could be a decent bet for risk-tolerant investors. As for risk-averse investors, the entire EV pack is currently on shaky ground amid the price war, increasing competition and macroeconomic weakness.
At the date of publication, Mohit Oberoi held a position in: AAPL , RIVN . All information and data in this article is for informational purposes only. For more information, please see Barchart’s Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
