Electric vehicle (EV) startup Fisker (NYSE:FSR) is an interesting case for investors who want to get in on the current EV stock craze via Fisker stock. It has a high impact prototype in the affordable Ocean electric SUV. All EV startups have a prototype, though, and many never get beyond that stage to production.
Unlike most EV startups, it has a founder (Henrik Fisker) who has actually released an electric car already. His earlier efforts stumbled, but the Ocean is checking all the boxes. So is now the time to consider Fisker stock?
EV stocks have been on fire in 2020. For those who want to invest in this rapidly growing market, the cost of entry is getting higher. Fisker stock is appealing because it combines potential with affordability. It’s up nearly 70% since completing a merger with Spartan Energy Acquisition at the end of October, but currently trades in the $15 range.
The company is sitting on over $1 billion in cash. The Ocean SUV is set to go into production in late 2022. In other words, FSR offers the opportunity of significant long-term growth potential with relatively low risk.
Waiting For The Ocean to Make It to Production
Setting a late 2022 production target gives the company plenty of time to avoid the situation of a delayed release. That’s a good thing. There can be many speed bumps on the road to production, even when partnering with a highly experienced auto industry supplier for assembly.
Nothing can turn the narrative around an EV maker negative faster than missing a production date. Any delay in that all-important launch date raises questions among investors and industry analysts. Delays also raise concerns with consumers.
Fisker has given itself plenty of lead time and it has enough cash to get to the finish line.
However, as I wrote several weeks ago, the challenge is to keep up the excitement in the meantime. Two years can be an eternity in any industry and the EV market is moving at breakneck speed. The next two years will be critical as traditional automakers pivot toward offering more EVs.
This is where the Fisker stock story will get interesting. The company’s PR team will have to walk the fine line between keeping up interest and generating pre-orders, and coming off as a hype machine that people tune out.
How the team handles this period has real potential to impact the value of FSR, for better or worse.
Bottom Line on Fisker Stock
With Fisker, it seems there is no middle ground. CNN Business is currently tracking three investment analysts who are covering Fisker stock. Two have it rated as a “buy,” one has it as a “sell.” What’s interesting here is the FSR bear has a 12-month price target of $16, which is only 4.8% downside. The median price target of $22 has 31% upside.
That’s not a whole lot of analysis to pick from, but the message I take from it is that Fisker stock is relatively low risk with plenty of potential. In addition, I believe shares in Fisker are likely to begin to rise more dramatically beyond that 12-month timeframe. Assuming the company is able to launch the Ocean EV as planned in late 2022, that will be the real catalyst for Fisker stock growth.
Getting in now, when FSR is trading in the $15 range, is likely to pay off over the next year. There will undoubtedly be down days — like today — but Fisker is on the right path. By the time the Ocean makes it to production, the current price is going to seem like a bargain basement deal in hindsight.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation.