An analyst call has propelled shares of Fisker (NYSE:FSR) lower this week. But is today really a stronger opportunity to take a test drive or should investors continue to steer clear of Fisker stock? Let’s take a look at what’s happening to FSR today, then offer an informed risk-adjusted determination aligned with those findings.
It has been a less-than-jolly December for luxury EV manufacturer Fisker and the company’s investors. Last week and to no fault of its own, other than the ugly side of momentum possibly rearing its head, shares tumbled 17%. So, what exactly went wrong? It’s fair enough to point fingers at news-driven obstacles inside the electric vehicle market as the primary culprits.
There were a couple of bearish analyst notes to contend with. A secondary offering raising dilution worries in the group didn’t help matters. Investors also had news of a weaker General Motors (NYSE:GM) partnership to digest and a delayed U.S. Post Office fleet upgrade worth roughly $6 billion to sweat over. And sweat they did with a widespread sympathy reaction and offending companies cratering upwards of 50%.
Yet despite potentially good news earlier this week and many of its EV peers finding some toe dipping-style buying, Fisker’s share price has continued to grow markedly weaker.
A couple announced partnerships on top of a recent key collaboration with Magna International (NYSE:MGA) positions the company as an “asset-light” automobile designer rather than as a more costly and traditional manufacturer as it looks to roll out its first vehicles beginning with the Fisker Ocean SUV in 2022. Sounds good, right? And the reports did help shares find a bit of footing until Thursday’s session.
Shares sank nearly 11% after Wolfe Research initiated coverage of Fisker stock with a “sell” rating and price target of $15 on Wednesday evening. Wolfe Research? It’s not a well-known investment house, but analyst Rod Lache’s legacy from Deutsche Bank has some “apparent” carte blanche with investors.
“Apparent?” Yup. With the single-session price drubbing Fisker is already fetching $15 after a gap open at $15.28. But if you’re thinking that’s not of much use to anyone other than bears already positioned short, then it’s time to put a deserved positive spin on FSR’s price chart.
Breakdown: Fisker Stock Weekly Price Chart
Source: Charts by TradingView
A couple weeks back it may have appeared two key pattern breakouts tied to a large “W” corrective base would put some stock prices in Fisker permanently in the rearview mirror. Nope. Both a pattern mid-pivot buy decision through $18.24 and breakout purchase above its prior all-time-high of $21.60 proved short-lived.
The potentially good news is Thursday’s bearish analyst call has established a fairly run-of-the-mill total corrective move of 34% in Fisker over the last two weeks. With declines of around 30% quite common in volatile up-and-comers of Fisker’s caliber, today’s share price sides more squarely with offering value than arguably the start of something more sinister.
Adding to that more upbeat assessment, shares are now also positioned inside a band of price support backed by Fibonacci levels and prior downtrend resistance. That’s clearly illustrated on the provided weekly chart of Fisker stock.
Are investors looking at the next Apple (NASDAQ:AAPL) or more aptly, Tesla (NASDAQ:TSLA)? Honestly, it’s highly unlikely. Still, with Fisker’s recently engineered reverse merger netting the outfit more than $1 billion in its coffers and today’s similar size market cap, in a very overplayed EV market Fisker has decent value from a couple different angles for investors to consider.
As for an actual purchase in today’s market, I’d wait. Currently, FSR’s weekly stochastics is bearishly aligned. I’d like to see that situation cleared up alongside a bottoming candlestick which holds zone support, before pulling the trigger on a long position.
On the date of publication, Chris Tyler does not hold, directly or indirectly, positions in any securities mentioned in this article.
Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. The information offered is based on his professional experience but strictly intended for educational purposes only. Any use of this information is 100% the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.