It was exciting news for electric vehicle enthusiasts when California-based Fisker (NYSE:FSR) finally went public through a reverse merger with Spartan Energy Acquisition back in October. With Fisker stock now trading on the New York Stock Exchange, investors could now place their bets on Fisker’s flagship model, an SUV known as the Ocean.
An argument could actually be made that Fisker is the world’s most ambitious electric vehicle manufacturer. Or at least, they will be once they start rolling out the Ocean SUV’s.
Patience will be required as the Ocean won’t likely be available to the public until the fourth quarter of 2022. Therefore, Fisker stock holders will need to have a forward-looking vision as the company won’t likely be profitable for a while.
If it takes so much faith to invest in Fisker stock, what’s the value proposition here? That’s the billion-dollar question and I’ll try to show you today that the stock, volatile as it is, deserves a place in your electric vehicle niche holdings.
A Closer Look at Fisker Stock
Ever since the business combination with Spartan Energy Acquisition was finalized and Fisker stock went public, it’s been a wild and crazy ride for investors.
Prior to the closing of the merger, Fisker stock had been a relatively boring stock, trading near the $10 area month after month. Upon the closing of the merger deal, Fisker shares promptly shot up past $16, but then came back down to $12.
The bulls again pumped the share price up to $17 in September. Unfortunately, this push was followed by a major bear raid as Fisker stock fell to $9 in October.
If you can believe it, the price action got even crazier after that. On Nov. 25, Fisker stock was driven up to its 52-week high of $23.63. Yet, as of the close of the market on Dec. 11, Fisker shares had declined to $14.67.
Suffice it to say that Fisker stock isn’t for everyone. Some folks won’t want to deal with the stock’s volatility, which could persist for a while. That’s perfectly understandable. For more risk-tolerant investors, though, a buy-and-hold strategy with Fisker shares could eventually pay off.
What We Know About the Ocean
Since Fisker’s profitability will depend largely on the success of its flagship SUV model, it’s important to discuss what’s already known about the Ocean.
For one thing, the Ocean will be assembled by a European company called Magna International (NYSE:MGA). The manufacturer suggested retail price, also known as the MSRP or “sticker” price, will be set at $37,499.
That’s a fairly reasonable price point for a brand-new electric SUV in 2022. And reportedly, the Ocean will offer some nice features:
- Solely powered by electricity
- Two- or all-wheel drive
- A battery pack of at least 80 kilowatt-hours (kWh)
- The fastest version is said to accelerate from zero to 60 miles per hour in 2.9 seconds
Since the Ocean’s rollout won’t take place until 2022, Fisker stock holders will undoubtedly demand updates on the company’s progress.
Thankfully, Fisker did release an update on the Ocean not long ago. Specifically, the company completed a key engineering and purchasing milestone known as a Preliminary Product Specification (PPS) gateway for the Ocean.
This PPS gateway completion is significant for two reasons. First, it confirms the preliminary specifications and performance targets on key components and subsystems of the Ocean. Furthermore, Fisker can now establish the timing for subsequent Ocean gateways all the way through to the 2022 planned production start.
Fisker Chairman and CEO Henrik Fisker commented that achieving the PPS gateway milestone establishes his company’s “ability to set aggressive targets and achieve them on time.”
Going forward, the best thing that Fisker can do would be to provide more frequent updates on the Ocean’s progress. Fisker stock holders don’t want to be kept in the dark regarding the company’s potentially groundbreaking SUV model.
The Bottom Line
The Ocean will undoubtedly be an unusual SUV, but it will also be reasonably affordable. Hopefully, this will help to boost the Ocean’s popularity as well as Fisker’s bottom line.
It’s true that Fisker stock holders will need to be patient. In time, however, the company should achieve more milestones and that could help to reduce the stock’s volatility.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.