If you’re at all familiar with Henrik Fisker’s history in the automotive industry, you know that the 57-year-old failed spectacularly with his 2007 startup, Fisker Automotive. Back for a second kick at the cat, Fisker has learned a thing or two, which ought to help Fisker (NYSE:FSR) and Fisker stock stay out of the proverbial penalty box.
This time it will be different. Here’s why.
Fisker’s Got Some Perspective
Many people who write opinion pieces don’t like to give other authors credit because they feel that it cheapens their own opinions. I’m 100% the opposite. I love to mention great articles from competitors because good information is good information no matter where it comes from.
Forbes staff writer Alan Ohnsman, who covers transportation for the publication, recently wrote a piece about Fisker co-founder and chief executive officer Henrik Fisker and his wife, co-founder, and chief financial officer, Geeta Gupta Fisker.
If you’re thinking of buying Fisker stock, I recommend you read Ohnsman’s piece. It really does explain why the auto designer’s latest venture will be different.
As someone whose wife entered into a new business partnership in 2020, I can say with 100% certainty that a successful partnership involves partners who bring different skill sets to the table and, more importantly, respect those differences.
This appears to be the case with the husband-and-wife team.
“We have very different styles of working. I would almost say it’s a right-brain/left-brain-type segregation,” Geeta told Forbes. “Right brain is the creative side, so that’s Henrik. The left side is the data-driven analytical brain. That would be me.”
As Ohnsman’s article points out, Henrik’s primary job is to create excellent products such as the upcoming Fisker Ocean crossover SUV. His wife’s primary job is to ensure the vehicle isn’t too cost-prohibitive in terms of the cost to build and the cost to sell.
The Ocean’s base price is $37,499, $12,000 less than the Tesla (NASDAQ:TSLA) Model Y. If Gupta Fisker is successful at her primary task, investors can expect the vehicle to be a big success, both in terms of units delivered, but also the revenue generated.
“When I left Fisker Automotive, all I had was my car,” Henrik remembers. “I’m in a different position, mainly because of Geeta. Because she cuts the deals.”
As they work together to build a company that makes “really cool green cars, affordable cars,” I think it’s important for investors to realize that this is a labor of love for the couple. They’re not in this for the stock options, although those will come in droves should they meet with future success.
The Fiskers Control Fisker Stock
A lot of investors can’t stand dual class share structures. I’m not one of those people. I believe that businesses fail because of poor execution, not how ownership is structured.
As Ohnsman points out in his article, Fisker Automotive was owned 100% by others. Henrik Fisker was a glorified CEO. He had absolutely no control over the direction of the business. And if you’ve ever watched Marcus Lemonis on CNBC’s The Profit, you know how it can go with outside investors.
“Ownership is the only way to influence decisions, the right decisions,” Gupta Fisker says. “That’s why when we structured the deal…what was really important for us was super-voting rights. Because what you don’t want is a repetition of what happened last time, when other people come in and make the decisions.”
On Dec. 9, Fisker filed a shelf registration to sell up to 27.8 million shares of its Class A common stock for the exercise of warrants and up to 133.8 million shares of its Class A common stock at some point in the future by selling stockholders.
In the prospectus, it lays out the beneficial owners. Henrik Fisker and Geeta Gupta Fisker each own 50% of the Class B stock that comes with 10 votes each instead of one vote per Class A share.
Based on 277.3 million shares outstanding — 144.9 million Class A and 132.4 million Class B — the Fiskers hold 90.8% of the votes and 53.8% of the equity outstanding.
From where I sit, this control position ought to give the investor that owns 200 shares a sense of comfort rather than concern. This is the Fisker’s baby and that’s not up for debate. You buy Fisker stock knowing this condition going into the position.
The Bottom Line
I last wrote about Fisker in mid-December.
At the time, I reemphasized that risk-averse investors should only buy Fisker stock in the low teens or high single-digits. Unless something unforeseen happens, I don’t see that happening anytime soon, but you never can tell.
As for aggressive investors, $15 is a definite buy, while anything below $20 is worth considering if you’re willing to hold beyond 2021.
To me, it would be a shame for the Fisker Ocean not to make it to production. It’s a beautiful vehicle. That said, I do think Henrik Fisker learned a thing or two from his first attempt at creating a new car company.
And that should go a long way to success a second time around. For this reason, I continue to like it as a long-term buy.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.