Saturday, 9 December 2023

Why Fisker Shares Hit an All-Time Low This Week

by Earn Media

Fisker (NYSE: FSR) shares jumped on Thursday, but the stock was bouncing off an all-time low it hit this week. A spate of bad news has caused the electric vehicle (EV) start-up to lose more than 75% of its market value over the last three months.

That includes a drop of 17% this week as of early Friday, according to data provided by S&P Global Market Intelligence. Things got bad enough for Fisker this week that its founder and CEO felt the need to make a public statement contesting the negative reports about the company.

Early troubles

Fisker only recently began selling and delivering its fully electric Ocean SUVs, but it has had several setbacks. The company reduced its 2023 vehicle production volume guidance twice within a month. On its third-quarter earnings call, it cut its 2023 estimate to a midpoint of 15,000 vehicles, down from 21,500 at the midpoint of its prior range. Less than a month later, the company said it only expects to manufacture about 10,000 vehicles this year.

Even before the news about the production guidance cuts, investors were nervous about the company’s financial and operational condition after it delayed the release of the third-quarter report. That was only due to the timing of the replacement for its chief accounting officer, who recently left the company, however.

All these concerns led some analysts to downgrade the stock. Most recently, Evercore ISI’s Chris McNally dropped his rating on the stock to the equivalent of hold from buy. He also cut his firm’s price target on the shares from $6 to $2.

A strong rebuttal

This week, CEO Henrik Fisker said he felt negative sentiment on his company has been “overblown.” He pointed out that its EV has now launched in 11 different countries, and said he feels the company is on track with its business plan. Fisker also said the company will provide another business update later this month.

Investors haven’t been waiting for that, though — they’ve been dumping the stock. With Fisker still near its all-time low, there could be money to be made for new investors here if the CEO’s optimism eventually proves to be warranted. Given that its market cap is now below $500 million, it won’t take much positive news to cause the stock to bounce. After all, the 10,000 vehicles it’s now guiding to produce this year would bring in about that much in revenue.

Fisker stock is a risky bet, but it may be one that investors could put some of their speculative funds into, as long as they are clear on the risks involved.

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Howard Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.