Fisker Inc. is a Danish car manufacturer specializing in designing and producing electric vehicles and offering mobility solutions. The company manufactures zero-emission products and electric cars, with models such as the Fisker Ocean, Pear, Alaska, and Ronin. Currently, Fisker’s stock price is 0.016, with a total drop of −0.00020 (1.23%) today.

What Happened to The Stock?

Fisker (OTCMKTS: FSRNQ) just revealed a new proposition, which they say will bring the now-bankrupt company, not less than $46.25 million in debt, under some breathing space. Due to a lack of necessary funds from its investors, the firm might resort to selling its remaining Ocean SUVs to American Lease as a last-resort measure to raise money in the EV industry.

Fisker’s stock is up by almost 2.5 per cent as of press time. Investors must wait patiently for further updates following the Fisker hearing, which was held on July 9. However, no public information about the outcomes of this meeting is currently available. The next significant hearing is scheduled for July 16, which will be crucial in determining the future course of the company and its restructuring efforts.

Can a Deal Save the Company?

American Lease has made a deal with Fisker to buy all the remaining vehicles intended for North America. It is going to pay $16,500 for each new Ocean model that is in good condition and is worth the sum of $2,711. It will also accept damaged cars for $2,500 and previously titled ones for $3,200.

Fisker has taken a nosedive for the past many years. For sure, since they started Ocean deliveries in the summer of 2023, the company almost day in day out had one or another trouble. Earlier this year, Fisker sold its cars at a cost to avoid going bankrupt. 

However, this strategy turned out to be a waste of money. The reason for Fisker’s troubles is not that it is alone in the problem. 

A lot of EV companies are going through difficulties as the electric vehicle industry is experiencing start-ups like Lucid and Rivian produce high losses, while more mature EV manufacturers such as Tesla are cutting prices, slowing the growth of production, and noticing reductions in profits respectively.

Why is Fisker Stock Dropping?

Fisker (FSRN -4.71%) stock has sagged throughout this year, and they were down by 4.71% this morning. Up till now, most of the steps that Fisker has managed to take in addition to the presence of multiple EV cars look bleak and they are still not good enough to earn the brand a good EV image. Even so, just when the EV maker showed the slightest signs of a minor improvement, their dreams broke.

Analysts recommendation is to cut the price target of Fisker stock by a staggering 90%. At 2022’s end, Fisker had $736.5 million in cash. After one year, it had around $395 million, including restricted cash that it cannot use for everyday purposes. It burned through about $340 million in cash in a single year. Should a repetition of this event occur again, it would be second quarter 2023 when they would face being out of cash.   

But while this is the case, the company has encountered difficulties in scaling up production and meeting its delivery targets to date, with CEO Henrik Fisker even admitting that the company lagged at the last earnings conference call of Fisker.

Through successful distribution patterns and increasing deliveries, Fisker can create a revolution for itself and at the same time have a major effect on its stock price.

The fact that Fisker might possibly face bankruptcy will be the second failed auto startup of Henrik Fisker, a guy who began his career as an automotive designer and was also a Tesla (TSLA.O) consultant.

Fisker Price and Forecast

In February 2021, Fisker’s shares peaked at $28, valuing the company at nearly $8 billion. However, the shares have since plummeted to less than 10 cents each, reducing the company’s market capitalization to under $50 million. Fisker had announced discussions with an established automaker, but according to a regulatory filing made on Monday, those talks have collapsed without reaching a deal.

From the company’s perspective, Fisker stock is on the brink of bankruptcy, among other potential reasons to consider selling. Case point: carmaker made an impressive 276m US dollar in 2023 but it is only 273 million US Dollars and 383 million US Dollars that it is based on vehicle sales.

However, the cost of making those cars was about $376 Million. Since the company released its first unfinished vehicles in late 2023, Fisker owners have faced significant challenges. Approximately 6,400 customers paid up to $70,000 for their vehicles, only to encounter issues with incomplete features and poor performance. Compounding these troubles, Fisker is now dealing with financial losses totaling an additional $100 million.

So, what are the long-term Fisker stock forecasts? The prediction from Wallet Investor, which is an algorithm-based forecasting service, is that in December 2022, Fisker will cost $18.93, and until 2025, the price will have grown to $28.87, in sync with the expected rise in production and revenues.

Given the current financial instability and uncertain future of the company, potential investors may question, “Is Fisker a good stock to buy?” Based on the recent stock performance, significant financial losses, and challenges in production and sales, we recommend not buying Fisker stock at this time.