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Stocks of Fisker Bounce Off Record Lows as Production Cuts Free Up Cash

December 1, 2023
minute read

Fisker Inc.'s shares experienced a rebound on Friday following the electric-vehicle manufacturer's announcement that it has opted to curtail production in December, aiming to release more than $300 million in liquidity.

The company, denoted by the ticker FSR, indicated a revised projection for its 2023 production, now targeting just over 10,000 vehicles. This figure contrasts with the guidance provided in mid-November, which had initially suggested a production range of 13,000 to 17,000 vehicles.

In an official statement, Fisker Inc. clarified that the decision to reduce December production was a strategic one, aimed at prioritizing liquidity and unlocking more than $300 million in working capital. This move, according to the electric vehicle (EV) maker, enhances business flexibility. The positive response was evident in premarket trading, with the stock surging by 7%, recuperating from its record low of $1.58 at Thursday's close. The preceding month had witnessed a substantial 64.9% decline in the stock, marking its most significant monthly drop since it commenced trading in October 2020 after a merger with a special-purpose acquisition company.

Fisker Inc.'s weakened performance in November was underscored by its lackluster third-quarter report, revealing a wider-than-expected loss and revenue falling well below forecasts. The company's Chief Executive, Henrik Fisker, acknowledged the deviation from their original forecast but emphasized that considering the prevailing market conditions and negative sentiments around electric vehicle (EV) sales, the company is performing commendably. Henrik Fisker highlighted the acceleration in sales and deliveries despite the challenges.

In the third quarter, Fisker Inc. delivered 1,097 vehicles. However, the company reported delivering over 1,200 vehicles in October, and as of mid-November, it was on track to exceed October's delivery numbers in November. The decision to reduce December production aligns with the company's strategic focus on managing liquidity effectively.

In addition to the production adjustment, Fisker Inc. provided a "business update" on Friday. The company outlined its new delivery strategy, overcoming logistical challenges and preparing to initiate deliveries in Canada the following week. Moreover, Fisker Inc. revealed plans to introduce a leasing offering in 2024 and disclosed advanced discussions with several automakers regarding potential strategic partnerships.

Over the past three months leading up to Thursday, Fisker Inc.'s stock had experienced a sharp decline of 73.5%. In the same period, the Global X Autonomous & Electric Vehicles ETF dropped by 7.9%, while the S&P 500 gained 1.2%. The latest developments, including the decision to curtail December production and the strategic initiatives outlined in the business update, signal an effort by Fisker Inc. to navigate challenges, bolster liquidity, and position itself for a more resilient future in the competitive electric vehicle market.

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Cathy Hills
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