Typically, I don’t like to sway too heavily one side or the other on initial public offerings. You just never know what the investor sentiment is like until you do. However, I’ll make an exception for Fisker. A “fresh” electric vehicle maker, the Fisker IPO potentially poses a disruptive threat to Tesla (NASDAQ:TSLA). Ultimately, if you believe in capitalism and free market competition, you’ll come to appreciate its participation.
Of course, competition is one of the key factors that could end up disrupting the Fisker IPO. Lately, we’ve seen a surge in demand for EV companies. Some, like Nikola (NASDAQ:NKLA), have not been able to maintain their meteoric momentum. Other competitors, such as Nio (NYSE:NIO), have succeeded so far in keeping the fire burning.
No matter where you stand on the Fisker IPO, the introduction will occur at simultaneously the best and worst of times. Thus, don’t expect an easy or smooth ride.
Another factor to consider is that this technically isn’t the first rodeo for Fisker. Originally starting out as a private company, Fisker Automotive, it eventually declared bankruptcy in 2013. But that wasn’t before the defunct organization debuted one of the world’s first luxury plug-in hybrid EVs.
Called the Fisker Karma, the EV was a trendsetter in terms of automotive design and technology. According to Barron’s, the chief designer and brand namesake, Henrik Fisker, still drives his Karma. Although the Karma has a fascia that reminds me of Wario from the Super Mario series of video games, I can see why Mr. Fisker drives his Karma. It is otherwise a very sexy car.
Granted, there are many detractors here. But if you like EVs, here are three reasons to consider this public offering:
Henrik Fisker Is the Spark Plug Behind the Fisker IPO
Unless you’re an automotive buff, you may not know who Henrik Fisker is, beyond that he’s the founder of the company that bears his name. However, you’ve more than likely seen his work.
A legendary car designer, he has been the creative force behind some of the greatest automobiles ever concocted. Personally, I believe his talent really shined through with the BMW Z8, a masterpiece in roadster design. Indeed, if you own one of these rare gems, you’re doing very well for yourself!
According to Goliath.com, Fisker ranks in third place among the ten greatest car designers in automotive history. It may be an opinion, but I think you’ll find few dissenters. Again, his hand has been involved in multiple desirable cars.
And this lends tremendous credibility to the Fisker IPO. Not only do you have someone with proven talent in the internal combustion segment, Henrik Fisker also brought a luxury EV into production.
Admittedly, his original company failed. However, looking into some of the details, that may be due to internal, corporate grumblings that have little to do with designing cars. As you can tell from the gorgeous BMW Z8, when Fisker is in the right environment, his genius comes out.
I’d say that building a fresh organization with the people that you want is an encouraging sign. As well, some painful lessons learned in the past should be a net positive beyond the Fisker IPO.
Ocean SUV Hits the Sweet Spot
In 2022, Fisker plans to deliver the Ocean, an eco-friendly SUV with gorgeous looks. From my perspective, the design pays homage to British car makers Land Rover and Jaguar.
As long as it’s not a giant pile of crap like Land Rover and Jaguar, the Fisker Ocean is off to a very good start.
I’ve included the link above to the SUV so you can ogle its photos and performance specs. But as a potential investor in the Fisker IPO, I’m interested in the business proposition. And the Ocean — despite a clunky and uninspiring name — hits a sweet spot for consumers.
As the New York Times noted a little more than two years ago, global consumers love SUVs. If there’s one thing that’s keeping the legacy automakers in business, this platform is it. Sure, Tesla makes electric SUVs but they’re crazy expensive, especially with higher performance options.
However, the Ocean changes this narrative entirely. Coming in at a planned $37,500 for the base model, it sits right between Tesla’s Model 3 and Model Y. And this strategic price point is more disruptive than you may realize.
According to Car and Driver, many consumers may elect the otherwise less-desirable or less-fashionable sedan because of budgetary concerns. In the gasoline-powered world, sedans are typically cheaper on the initial cost and for fuel. However, with the Ocean, Fisker offers a very reasonable entry point, a desirable platform and environmental friendliness, all in one.
This guy isn’t just a legendary designer but an astute businessperson.
Deals That Write Themselves
Speaking of which, Fisker the company is in talks with Volkswagen (OTCMKTS:VWAGY). Specifically, Fisker would like to use VW’s “modular electric drive matrix, or MEB, platform to cut costs and halve development time for its debut model, the Ocean SUV.”
In my opinion, this makes sense for both companies. As a legacy automaker, Volkswagen wants to charge into the EV arena quickly. On the other end, Fisker is a proven brand thanks to the namesake designer. In a very saturated, Tesla-dominated market, Fisker EVs are a breath of fresh air.
From both a design and pricing standpoint, the Fisker IPO could be incredibly disruptive. On a selfish note, it would be great for drivers like me, who may not want to drive a Tesla like every Karen and Ken is doing.
But if the talks break down for whatever reason, Fisker would offer natural synergies for any other major automaker. Together, the partners can offer viable competition that has not quite materialized yet. In other words, Tesla’s dominance is begging for an alternative.
Look at it this way: What would Ford (NYSE:F) be without General Motors (NYSE:GM)? Over the Pacific, would Toyota (NYSE:TM) be as competitive were it not for Honda (NYSE:HMC)? And I’d argue that Ferrari (NYSE:RACE) was made a much better company because of the VW-owned Lamborghini.
Truly, this is an exciting time for EVs because that is what the Fisker IPO could potentially bring to the table.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. As of this writing, he owns NKLA stock.