Fisker (NYSE:FSR) is an American electric vehicle manufacturer that has gone through some significant declines despite hype around the EV space that goes back to 2021. On the surface, it looks like FSR stock may have bottomed, but do fundamentals and the story overall support a reversal of fortune?
Pros and Cons of Investing in Fisker Right Now
Fisker, like many electric vehicle manufacturers, has faced its fair share of production challenges. The company announced that it manufactured 1,022 Fisker Ocean SUVs in the second quarter of 2023, falling short of its guidance for 1,400 to 1,700 units. The company attributes this miss to supply chain issues. Fisker aims to increase its production rate to meet the demand for its vehicles and support its growth initiatives. All that should be a positive.
From a fundamental perspective, the company reported revenues of just under $200,000 in Q1 2023, missing analysts’ estimates. However, with the Ocean production ramp ongoing, the company expects to recognize significant revenues in the current period. Despite these financial challenges, Fisker remains optimistic about its future growth prospects.
Specifically, the company predicts revenue growth from less than $1 million in 2022 to $1.04 billion in 2023 and $2.9 billion in 2024. However, these projections depend on the company’s ability to ramp up production and deliver on its promises. I think these numbers are too aggressive, but not much surprises me anymore.
One of the main risks associated with investing in Fisker is the company’s liquidity. The company had approximately $652.5 millionin available cash and cash equivalents as of the end of Q1 2023. Given the high costs associated with starting an electric vehicle manufacturing business, Fisker may need to raise more funds to finance its production ramp-up.
Despite challenges, Fisker has several growth opportunities that could potentially offset the risks. The company’s strategic partnerships with established manufacturing giants like Magna International (NYSE:MGA) and Foxconn could significantly de-risk its production process and ensure high-scale production at a sustainable cost.
Fisker is also planning to expand its market reach. The company has plans to open its first delivery center in China in 2023, with deliveries expected to start in Q1 2024. This expansion into the Chinese market, which accounted for approximately one-fourth of global car sales in 2022, could significantly boost Fisker’s sales and revenues.
The Bottom Line on FSR Stock
Is Fisker ultimately a good investment? It’s certainly a high-risk venture, but it is a risk that could potentially provide substantial returns for long-term investors. The company has several growth opportunities, including its strategic partnerships, market expansion plans, and product line expansion. However, investors should also consider the comspany’ production and financial challenges. As such, timing is crucial when investing in Fisker.
To me, this is a stock that needs to be considered more in terms of portfolio weighting than anything else. And despite risks, Fisker’s stock could potentially provide substantial returns for investors willing to take it on.
On the date of publication, Michael Gayed 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.
