Fisker (FSR) released a slew of bad news in its fourth-quarter earnings report yesterday, rattling investors and Wall Street analysts.
Fisker reported that the company has “significant doubts about its ability to continue as a going concern” when it reports its official 2023 financial statements given its financial condition, dealers' evolving sales approach and the challenging electric vehicle market. Fisker also said it will reduce its workforce by 15%.
Fisker said it had $396 million in cash at the end of the fourth quarter, but $70 million of it was locked up. Fisker said it is in discussions with a current bondholder about an additional investment in the company and is negotiating with “a major automaker regarding a possible transaction that could include an investment in Fisker and the joint development of one or more electric vehicle platforms.” Manufacturing in North America.”
Portal reported Friday afternoon that Fisker was in preliminary discussions with Nissan about a $400 million cash injection and that Nissan would have access to Fisker's upcoming truck platform.
The Fisker Ocean, the American automaker's new all-electric SUV, is on display in Barcelona, Spain, on March 3, 2022. (Joan Cros/NurPhoto via Getty Images) (NurPhoto via Getty Images)
In an interview with Yahoo Finance, Henrik Fisker, CEO and chairman of Fisker, said discussions with one automaker were advanced, although he would neither confirm nor deny that it was Nissan.
“What we said is that we are [in] Negotiating with an OEM [original equipment manufacturers] for electric vehicle development and production in the US and an investment,” Fisker said. “I think we started talking to several OEMs over six months ago, so obviously we've already done a lot of work, so I'm hoping this deal will close as quickly as possible that we're working on.
While talks of a cash injection and strategic partnership with an established automaker are welcome news, it hasn't been enough to allay doubts about Fisker's precarious condition. Shares of the electric vehicle maker plunged nearly 34% on Friday and have been below $1 since early January.
Fisker is optimistic about the future, although he has concerns about a liquidity crisis and a stock price that doesn't comply with NYSE rules as it trades below $1.
The story goes on
“I would say [despite] Despite the ongoing general decline in electric vehicles, we are still seeing a lot of interest in our vehicles. “The electric vehicle market has been difficult over the last few months, but I think with our transition to the dealer model we will actually increase our sales more than we have,” Fisker said. “We had 250% sales growth from Q3 to Q4, with the guidance we are currently tracking, we continue to see sales growth despite the drop in electric vehicles.”
Wall Street reacts to Fisker's outlook
Fisker CEO Henrik Fisker unveils the all-electric off-road Ocean called Force E during its first Product Vision Day on August 3, 2023 in Huntington Beach, California. (FREDERIC J. BROWN/AFP via Getty Images) (FREDERIC J. BROWN via Getty Images)
Citi analyst Itay Michaeli generally thinks Fisker's only product, the Ocean EV, is promising and isn't surprised that a major automaker is interested in investing in Fisker, but that's not enough to give him confidence maintained in Fisker.
“Entering such an agreement would likely be a major benefit for Fisker, but it is difficult to base an investment thesis solely on that, and we would have liked to see more progress made on this front,” Michaeli wrote in a note to investors . Michaeli downgraded the stock to Neutral/High Risk (equivalent to Hold) and lowered his price target to $0.80 from $4.
In the fourth quarter, Fisker reported revenue of $200.1 million, missing Bloomberg consensus estimates of $272.9 million, and a net loss of $463.6 million, well above the expected loss of $82 .7 million US dollars.
Fisker's challenges in establishing its direct-to-consumer model led the company to seek traditional dealer partnerships. The company said it now has 12 dealer partners and over 250 interested dealers.
While talks of new partnerships and a dealer distribution network are promising, investors' biggest concern is Fisker's lack of liquidity.
“If the company had sufficient liquidity until 2025, the risk-reward ratio here would probably be interesting, as the share price has come under considerable pressure,” wrote Michaeli. “But with liquidity reserves tightening and accounting/reporting issues still unresolved, it is difficult to make an investment case here in such a poor situation [near-term] Visibility.”
Pras Subramanian is a reporter for Yahoo Finance. You can keep following him Twitter and on Instagram.
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