Fisker (FSR) stock price analysis: such times call for caution

Fisker (NYSE:FSR) stock has become unloved and unwanted as concerns about the company continued. The shares have dropped for three straight months and are now hovering near their lowest level on record. 

Fisker has evolved into a penny stock with a 44% short interest, making it one of the most shorted companies in Wall Street. Its stock has plunged by more than 95% from the highest point on record, giving it a market cap of over $529 million.

Fisker has numerous challenges

Fisker Automotive is a company with a long history. It was established in 2007, received investment from the Energy Department, and filed for bankruptcy in 2013. This bankruptcy process cost the government over $139 million.

Fisker re-emerged from bankruptcy as a manufacturer of electric vehicles. After years of R&D, the company started selling its Fisker Ocean SUV a few months ago. The vehicle has an expected range of 360 miles and can move from 0-60 in about 3.7 seconds.

Fisker Ocean is not a cheap SUV, with Fisker Ocean Extreme starting at $61,499. With options, the vehicle sells for over $70,000. The cheapest Fisker vehicle starts at $39,000, which is not cheap compared to other ICE SUVs.

The cost is a major issue considering that EVs are historically more expensive than ICE vehicles. For example, Ford F-150, the highly popular truck starts at $33,835 while Toyota Tacoma starts at less than $40,000.

Therefore, there is a likelihood that Fisker Automotive will be forced to cut its prices in the coming months. Other EV companies like Lucid Motors, Tesla, and Ford have slashed prices in a bid to meet its target.

Fisker has also faced other challenges. One of its key challenges was delivering its vehicles from Europe to the United States. The process took longer days than what the company was expecting. It is also seeing heightened competition and the overall lack of demand for electric vehicles

All these events have forced the company to slash its delivery targets for the year. In its last financial report, the company predicted that it will deliver between 13k and 17k vehicles this year. It then reduced this target to 10k as challenges continued.

Fisker is having other challenges. Its cash burn is continuing, which could see it raise additional capital. At the end of last quarter, the company had about $625 million in cash and restricted cash. I suspect that Fisker will need to raise money in 2024.

In all fairness, all automakers go through challenges in their early days. Tesla, the gold standard of the industry went through similar challenges. At some point, many analysts believed that the company would go bankrupt as its cash burn accelerated.

Fisker stock price forecast

Turning to the daily chart, we see that the FSR share price has crashed hard in the past few months. It has become a penny stock that is trading at $1.44. This makes it quite a cheap stock that could attract speculators. The stock remains below all moving averages, meaning that bears are still in control.

Worse, the EV industry is not doing well. On Tuesday, Ford announced that it would slash its Lightning production amid weak demand. Therefore, I suspect that the Fisker share price will continue falling in the near term. 

In the long term, however, a bull run could happen as the company looks for a strategic partner. In a recent statement, Henrik Fisker said:

“Fundamentally, our business is making positive strides each day and I believe we have compelling long-term opportunities. The Fisker team are shareholders, and I am a significant shareholder in the company as well.”

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