The shares of electric vehicle (EV) startup Fisker (NYSE:FSR) are tumbling 14% in early trading. FSR stock is sinking primarily because the automaker slashed its 2023 production guidance from a range of 20,000-23,000 EVs to a range of 13,000-17,000 EVs.
Further, the company reported that it had discovered “material weakness” in the “internal controls” of its financial reporting.
More About the Guidance Cut and Fisker’s Performance
Fisker reported that it had lowered its production guidance largely because of shortcomings in ” its delivery and service infrastructure,” Reuters reported. The firm added that it was reducing its EV production to ensure that its inventory and working capital stay at manageable levels.
FSR, however, did acknowledge that the current elevated interest rates were having a negative impact on the demand for the company’s EVs.
On a positive note, the company stated that it had delivered 1,200 EVs last month, eclipsing its 1,097 deliveries for all of Q3.
The automaker also reported that it was benefiting from “a stabilized supply chain,” although it added that it still anticipates experiencing an “occasional bottleneck” from its partners.
Financial Reporting Flaws Do FSR Stock No Favors
Among the issues that triggered Fisker’s financial reporting warning were the company’s treatment of convertible notes, derivatives, and inventory.
Heading into today, the shares had sunk 33% in the preceding month, 44% in 2023, and 52% in the preceding 12 months.
On the date of publication, Larry Ramer 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.
