Investors Weigh the Better Buy: Fisker Stock or NFTs
Fisker (NYSE:FSR) made a big announcement on Dec. 20. While the news probably won’t do anything for FSR stock, I think it’s cool.
According to its press release:
“Fisker will launch exclusive digital art NFTs of original pen-on-paper sketches from the hand of Founder and Chief Designer, Henrik Fisker,” its Dec. 20 press release stated.
“As part of the first-ever Fisker by Hand: OCEAN Concept Collection NFT sale, Fisker is donating 50% of primary sales to nonprofit organizations supporting corporate ESG principles. For the inaugural release, a total of 100 Fisker by Hand: OCEAN Concept Collection NFTs are available for purchase.”
Some of Fisker’s NFTs (non-fungible tokens) are likely to be more valuable than FSR stock if the company’s upcoming EV, the Fisker Ocean, fails. That means the NFTs could make investors more money over the long haul than buying the shares of the startup.
Although I believe that Henrik Fisker’s second crack at building a car company will be more successful than his first one, I do think that the question which I raised in the headline is fair.
Why Not Buy FSR Stock and a Fisker NFT?
If you’re like me and believe that Fisker stock is a long-term speculative buy, I don’t see why you wouldn’t have bid on one of Henrik Fisker’s sketches that were auctioned on Dec. 22.
However, it appears that the NFTs weren’t nearly the hit I thought they would be with Fisker enthusiasts. According to the FTX website, the highest bid was 8.00 Solana (CCC:SOL-USD), the equivalent of $1,400. That was for the Ocean One, of which only a single copy was made. In total, it appears $6,877 was generated from the auction of 100 NFTs
Given the popularity of NFT auctions combined with the fact that 50% of the money is going to charity, I was convinced there would be more interest in the hand-drawn sketches from Henrik Fisker.
My guess was that any current owners of FSR stock who also have ordered an Ocean wouldn’t be opposed to bidding for one of Henrik’s NFTs. Only those with a bottomless pit of cash will bid for the single copy, though.
It turns out I was wildly optimistic about the auction’s success.
The Best-and Worst-Case Scenario
In my mind, it made sense to hedge your bet on FSR stock with one of the NFTs.
For example, let’s say you own 600 shares of Fisker. That would be a roughly $10,000 investment if you bought it in recent days. However, if you purchased 600 shares through the SPAC that Fisker merged with — Spartan Energy — that was an investment of $6,000 or $8,300, depending on whether you exercised the 200 whole warrants that came with the SPAC’s shares.
Let’s also say that you bought the Ocean One, which garnered a bid of 8 Solana, or $1,400.
In the best-case scenario, Fisker becomes a home-run success and FSR stock rockets to $100 by 2023 on the back of solid production numbers. At the same time, the $1,400 print you bought is worth $10,000 in 2023 because of the automaker’s success.
That’s a win/win.
The worst-case scenario is that Fisker flames out by 2023, entering the dustbin of automotive history, causing Fisker’s shares to drop to $0. At the same time, collectors decide Henrik Fisker’s drawings are worthless. Their value drops to $140 or 10% of what you paid.
What’s an additional $1,260 loss when you invested between $6,000 and $9,786 on Fisker stock?
The Bottom Line
If you’re a believer in Henrik Fisker’s vision, I don’t think it’s a question of one or the other. Instead, I believe the clever play was to buy a Fisker sketch at its auction to go along with your FSR stock.
Although speculative, I think a bet on Henrik Fisker is a winner in the end.
On the date of publication, Will Ashworth 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.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.
