Fisker (OTCMKTS:FSRN) stock is in the green today despite a report from TechCrunch alleging that the embattled electric vehicle (EV) company misplaced and temporarily lost track of customer funds worth millions. Is the bad news fully priced in?
The report comes after Fisker admitted several material weaknesses in its third-quarter earnings, such as oversight of its financial reporting requirements and accounting department. This led to “material audit adjustments to inventory, costs of revenue, convertible debt and derivative liability balances.”
Last month, the company disclosed that it would not be able to file its 2023 Form 10-K on time due to the weaknesses described above as well as “material weakness in revenue and the related balance sheet accounts.” The company noted that it would provide more details once it submitted the filing on its expected date of March 15. Fisker has yet to file its 10-K.
FSRN Stock: Report Alleges Fisker Misplaced Customer Payments
According to sources familiar with the situation, Fisker reduced the resources of its sales team as part of its transition to a dealer-partner model. This resulted in chaos within the company as employees began to lose track of customer payments. Some customers even received vehicles without making any form of payment.
“Checks were not cashed in a timely manner or just lost altogether […] We were often scrambling to find checks, credit card receipts and any wired funds a few months after a vehicle was sold,” an anonymous source told TechCrunch.
This ultimately led to an internal audit in December. Furthermore, the disorganization of vehicle sales was likely a contributing factor to Fisker’s delayed 10-K. The company’s outside auditor, PwC, requested more information about vehicle sales as part of preparing the annual report. Fisker wasn’t able to provide this information.
In addition, sources claim that Fisker isn’t sure how much revenue it raked in. Fisker’s preliminary earnings show 2023 revenue of $272.9 million.
The damaging news comes at a time when Fisker’s future is unclear as ever. Shares of the company were recently removed from the New York Stock Exchange. They now trade on the over-the-counter (OTC) market as FSRN stock. Yesterday, Fisker also announced price cuts of up to 39% for its Ocean EV.
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On the date of publication, Eddie Pan did not hold (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.
