Be Prepared For a Volatile Ride With Fisker Stock

Stock Market

Fisker (NYSE:FSR) is roughly a year away from delivering its first electric vehicle, but it remains one of the more intriguing stocks in the EV space. That doesn’t necessarily mean that FSR stock will be a good investment, though.

The Fisker logo hangs on display at the November 2011 International Auto Show.

Source: Eric Broder Van Dyke / Shutterstock.com

Fisker is trading at this writing at $15. That’s a 50% gain where it traded when the company went public in October 2020 through a blank-check merger with Spartan Energy Acquisition.

But Fisker’s been a volatile ride, hitting a high of $29 nearly a year ago, but dropping to close to its SPAC-merger price just three months later.

For the trailing 12 months, FSR stock is down roughly 3%. And over the last month, Fisker stock fell more than 12%.

The challenge when investing in Fisker stock is that the company is still pre-revenue. It won’t start producing its electric SUV, the Fisker Ocean, until this November.

So if you’re going to buy Fisker stock now, you can expect this kind of volatility to continue at least through 2022 and early into 2023. That’s part of the deal you make when you’re investing in a company that doesn’t have a product to sell yet.

FSR Stock at a Glance

Third-quarter earnings were seen as a minor disappointment, although I don’t put a lot of faith in earnings report when you don’t have sales to report yet.

The company reported a loss of 37 cents per share, which was a little worse than the 34 cents that analysts had projected. The company did say, however, that it had 18,600 reservations for the Ocean SUV.

“We continued to make rapid progress in Q3 2021 on our core focus, achieving program milestones that ensure we execute Fisker Ocean SUV on-time and with several segment-leading features,” CEO Henrik Fisker said.

Thanks to a green convertible bond offering in August, the company improved its cash position from $962 million at the end of the second  quarter to $1.4 billion at the end of the third quarter.

A Fisker NFT Series

Non-fungible tokens, or NFTs, became all the rage in 2021. The NFT market was responsible for more than $23 billion in trading just in 2021, according to DappRadar.

NFTs are digital assets – usually art, but it could be anything on a digital platform. They can include photos, videos, audio files or drawings. NFTs are stored and traded on the blockchain.

So why shouldn’t Fisker get into the NFT business? Obviously, there’s a demand for NFTs in general. And Fisker is one of the more intriguing names in the EV space these days, so it makes sense that there would be a demand among Fisker devotees for an NFT produced by the company.

In December, Fisker announced its first NFT series of original pen-on-paper sketches by Henrik Fisker of the Ocean SUV. Fisker made 100 of the NFTs available, with 50% of the proceeds to go to nonprofits that support ESG principals.

Said Fisker:

I’m always looking for ways to strengthen our relationship with our customers, fans and stakeholders. I’m a car designer by heart: I still draw my designs with a pen on paper, where I’m able to create a unique motion that leads to emotional lines, so the design ultimately feels like it’s created by a human, not a robot.

It’s an interesting concept. And there’s no downside for FSR stock.

The Bottom Line

At $15 per share, Fisker is certainly appealing as an alternative to Tesla (NASDAQ:TSLA), which currently trades at over $1,000 per share even after a recent stock split. Investors can dream of buying FSR stock low in hopes of duplicating Tesla’s 900% increase over the last 24 months.

But you have to remember that Tesla went through a lot of down times even after it began production. Fisker is still months away from starting up its factory, and then it will have to scale.

If you’re hoping for Fisker to be a solid alternative to Tesla or other established auto manufacturers, you’ll have to be patient. If you’ve got a decent amount of risk tolerance, then hold your shares, sit back and enjoy the ride.

And maybe pick up an NFT on the side.

On the date of publication, Patrick Sanders was long TSLA. He did not have (either directly or indirectly) any other 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.

Patrick Sanders is a freelance writer and editor in Maryland, and from 2015 to 2019 was head of the investment advice section at U.S. News & World Report. Follow him on Twitter at @1patricksanders.

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