On March 18, Fisker (OTCMKTS:FSRN) announced that it would pause production of its Ocean SUV for six weeks to reduce inventory while it reviews its financing and strategic objectives. As of then, its inventory totaled approximately 4,700 vehicles, worth over $200 million based on company estimates. Fisker stock is down by over 95% this year.
This estimate may have declined since the electric vehicle (EV) company announced price cuts of up to 39% on March 27. Fisker’s most affordable vehicle, the Ocean in the Sport trim, now starts at just $24,999.
Six weeks after March 18 gets us to April 29. However, according to Fisker’s production partner, Magna Steyr (NYSE:MGA), production of the Ocean is still “idle.” Magna produces the Ocean in Austria.
Fisker Stock: Magna Says Production of Ocean SUVs Is “Idle”
Magna’s production update isn’t entirely surprising, given Fisker’s fragile state. In its preliminary Q4 and full-year results, the company warned of substantial doubt about its ability to continue as a going concern upon submitting its 2023 Form 10-K. The company ended up filing its 10-K late on April 23, revealing a 2023 net loss attributable to common shareholders of $939.94 million compared to $547.49 million a year ago.
As Fisker stated in its 10-K:
“The Company believes that its available liquidity will not be sufficient to meet its current obligations for a period of at least twelve months from the date of the filing of this Annual Report on Form 10-K. Accordingly, the Company has concluded there is substantial doubt about its ability to continue as a going concern,”
What’s more, on March 15, Fisker failed to make a $8.4 million interest payment for its 2026 notes. Following a 30-day grace period, the failure to pay resulted in a default, also triggering a cross-default for 2025 note payments. If it is unable to receive financing or relief to satisfy these payments, Fisker could file for bankruptcy protection within 30 days of the 10-K submission.
Now, Fisker’s hopes for survival seem pinned on securing a bailout from another automaker. In an all-hands meeting held last month, CEO Henrik Fisker noted that at least four undisclosed automakers still have interest in a potential investment. No updates have been provided since then.
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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.
