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Fisker (NYSE:FSR) stock price continued its freefall this week as concerns about the electric vehicle company gained momentum. The shares crashed to a record low of $2.35 on Monday, much lower than its all-time high of $7.21. This retreat has brought its total market cap to over $834 million.
Concerns about Fisker remains
Fisker Automotive is a car building affordable electric vehicles using a different strategy than other companies like Tesla and Rivian. It does its Research and Development (R&D) and then outsources the manufacturing to Magna.
This means that Fisker is an asset-light model that has embraced the same approach that companies like Apple use. It started to manufacture its vehicles a few months ago and has already achieved a lot of success.
Fisker delivered 1,097 vehicles in the third quarter and over 3,000 in its lifetime. It is on track to deliver between 13k and 17k this year. This is a remarkable progress for any company in the EV industry.
Fisker, however, has gone through challenges, which played a role in its guidance downgrade. The biggest challenge is that it manufactures its vehicles in Belgium and the delivery time to the United States and Canada is longer than expected.
The other challenge is that Fisker, like other companies, is still seeing cash burn as it ramps up production. It expects that its capital expenditure on R&D plus CapEx will be between $565 million and $640 million. Its R&D spend is expected to drop while SG&A is expected to rise.
Further, the company is facing a challenge with its employees. The most recent one was that Florus Beuting, the company’s CFO left the company, less than a month after he was hired. He replaced his predecessor who left in the previous month.
Such a move is often seen as a red flag because a CFO has inside information that most people about the company. At the same time, the company received a notice of late filing of its 10-Q from the SEC. It now has about 6 months to file the document.
Fisker stock price forecast
Fisker, which has a short interest of over 41%, has been in a strong sell-off recently. It has crashed from the year-to-date high of $8.66 to a low of $2.35. Most recently, the shares plunged below the key support at $4.26, the lowest swing in April. It has dropped below all moving averages.
The Average Directional Index (ADX) has jumped to almost 40, a sign that the bearish trend is strengthening. Also, the Relative Strength Index (RSI) has crashed to the oversold level of 20. Therefore, I suspect that the shares will likely continue falling as sellers target the key support at $2.0.
The post Fisker stock price is extremely cheap: Is FSR a value trap? appeared first on Invezz
