EV Investors Should Give Fisker a Shot

Investing in younger, newly public electric vehicle (EV) companies, including Fisker Automotive (NYSE:FSR), can be vexing. FSR stock proves that.

an electric vehicle (EV) at a charging station representing EV stocks
Source: Alexandru Nika / Shutterstock.com

In July, Fisker surged on news that it  was merging with a special purpose acquisition company (SPAC) so it could go public. Those gains were rapidly given back as market participants fretted about the  expected prices of its vehicles and its ability to compete with Tesla (NASDAQ:TSLA).

Then came another rally sparked by optimism about the EV space, followed by another sharp decline which gave way to a surge that started in November. But subsequently  FSR stock slid mightily from its late 2020 highs. In mid-afternoon trading today, the shares now sit about 35% below their 52-week high.

In other words, there’s been a lot of herky-jerky action in Fisker with ample opportunities to make money or get clobbered. Now, the stock resides around $15 – a price some have seen as attractive. Moreover, the company’s improving fundamental outlook indicates that the shares’ next rebound could be more sustainable than their prior pops.

Reasons to Believe in FSR Stock

One of the primary risks of investing in many EV equities other than Tesla and Nio (NYSE:NIO) is that some of these companies aren’t yet producing vehicles. That’s true of Fisker, but that situation will soon change for the better.

The Ocean – Fisker’s sport utility vehicle and its primary product at this juncture – is in the operational phase of production following a series of agreements last month between the automaker and Canadian auto manufacturer Magna (NYSE:MGA). There are already 10,400 confirmed orders for the luxury SUV, and Fisker expects to unveil a prototype this summer,  with deliveries slated for late 2022.

That timeline is achievable because Fisker’s production is original and resourceful, especially when measured against old-school automakers. Magna will actually build the Ocean, while Cox Automotive will deliver and service Fisker’s SUVs.

Those relationships are crucial to the performance of FSR stock because, if it executes well, Fisker could be able to operate more efficiently, use an asset-lite model and contain its costs. Those are all attractive factors for a start-up.

Those who are bearish on Fisker  will likely say that industrial names are the best EV start-ups in which to invest because those companies steer clear of direct competition with Tesla. After all, by launching a luxury SUV, Fisker has to go head-to-head with Elon Musk’s company.

However, the Ocean will be less expensive than its Tesla counterpart, potentially increasing the demand for Fisker’s EV. Second, the U.S. and European auto markets have a history of buying a significant number of luxury vehicles made by more  than one automaker. For example, in the U.S., there has long been significant demand for luxury vehicles made by BMW, Toyota’s (NYSE:TM) Lexus, and Daimler’s (OTC:DDAIF) Mercedes.

And affluent customers don’t always want to have the same products as their friends and neighbors. In other words, the demand for the Ocean could be strong if Fisker’s prices are favorable  and its designs are compelling.

Fisker Can Truck Higher

One of the things that has made Tesla successful is its evolution beyond its first vehicle, the Roadster, to a company that now offers multiple vehicles and multiple models of each vehicle. As the EV industry matures, the fates of many of today’s start-ups will be determined by their ability to effectively market more than one vehicle.

Kudos to Henrik Fisker, Fisker’s CEO,  because he obviously realizes this. In a recent tweet, he said his company wants to create a “lifestyle” pickup truck. His tweet included a design, though he says the final product will be more captivating. In my humble opinion, the depiction in his tweet is a lot more attractive than Tesla’s Cybertruck.

Fisker could deliver its pickup in late 2023. Sure, that’s a long time from now.  But with the Ocean and the progress that the company will likely make on its pickup truck, FSR stock looks compelling on its recent pullback.

On the date of publication, Todd Shriber did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.

Todd Shriber has been an InvestorPlace contributor since 2014.


Article printed from InvestorPlace Media, https://investorplace.com/2021/01/fsr-stock-looks-really-interesting-following-recent-slide/.

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