Fisker Stock Is Worth Considering, But Beware the Risks
Electric vehicle (EV) stocks were hot performers to start off 2021, but since the spring, they’ve struggled. A variety of factors including a global chip shortage, rising interest rates and share value dilution as a result of raising capital led to investors losing confidence in the sector. Fisker (NYSE:FSR) felt that impact more than many others. This EV startup has the additional challenge of not actually having any vehicles in production. It’s been on the upswing for the past six weeks, but between the end of February and mid-May, FSR stock plummeted 65%.
Now trading near $19, Fisker shares have nearly doubled in value since the current rally began six weeks ago. With the expected 2022 production date of the Fisker Ocean electric SUV approaching, is now the time to consider investing in FSR stock?
Time for an overview of the factors — good and bad — that will be part of that decision.
Fisker Ocean SUV Status
Fisker’s first production EV will be the Ocean, a compact, affordable electric SUV. News of the Ocean started Fisker stock on a growth trajectory starting last fall.
So, what is the status of the Ocean at this point? The company has a manufacturing partner signed up, over 17,000 pre-orders and production scheduled to start on November 17, 2022.
That’s not as good as having Oceans on lots and ready for delivery, but everything seems to be going according to plan.
What About the Global Chip Shortage?
A global shortage of chips is boosting semiconductor stocks while causing huge headaches for auto makers. That’s part of the reason why EV stocks have slumped.
However, Fisker says it will not be affected. With production not scheduled to start for more than a year (time for supplies to improve?) and a chief technology officer (CTO) with a chip industry background, Fisker is confident the current shortage will not impact the Ocean.
Fisker Is (Maybe) Making the New Popemobile
On May 21, company founder Henrik Fisker told reporters that he’d had a private audience with Pope Francis. As a result of that conversation, he says that Fisker will be making a customized electric vehicle that will become the new “Popemobile” in 2022. The first “all-electric papal transport” will be based on the Ocean SUV. The company even put out a press release announcing the news.
The Vatican has been silent on Fisker’s plans and the details of the meeting. The market reaction was muted as well, with no movement of consequence for FSR stock after the news broke. The Popemobile is a one-off with little real impact other than bragging rights, and Fisker has a reputation for grandiose statements that end up falling through.
Concern About Follow-Through
The Popemobile is one thing. However, other claims can have more serious consequences.
In February, Henrik Fisker told The Verge that the company was dropping its quest to develop a solid-state battery. He’d previously claimed the company was close to a breakthrough in what would be revolutionary battery technology.
A solid-state battery would be less flammable, faster to charge, and battery packs could be more dense. That was part of the Fisker appeal. However, Fisker has now thrown up its hands:
“It’s the kind of technology where, when you feel like you’re 90 percent there, you’re almost there, until you realize the last 10 percent is much more difficult than the first 90. … So we have completely dropped solid-state batteries at this point in time because we just don’t see it materializing.”
This pattern of making grand pronouncements and then walking them back makes investors nervous. Especially with the Ocean not yet in production.
However, on a brief positive note, to start of the week, FSR stock was added to the Russel 3000 Index. That adds further legitimacy to the company and was considered an important milestone.
Bottom Line on FSR stock
This brings us back to the question of whether now is the time to make a move on FSR stock.
Fisker shares have a “B” rating in Portfolio Grader. Among the investment analysts tracked by the Wall Street Journal, FSR is rated a consensus overweight with a $23.22 price target.
There is risk involved here — Fisker has yet to produce an EV, and there has been a pattern of announcements falling through. However, the demand for EVs is high, and if Fisker hits its targets, the payoff and long-term growth potential for investors is considerable.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
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