It’s crashed with the best of them. But when it comes to today’s Fisker (NYSE:FSR), is there anything under the hood which makes FSR stock worthy of parking in investors’ portfolios? Let’s look at what’s behind the action off and on the price chart, then offer an aligned, risk-adjusted determination based on those findings.
ChargePoint Holdings (NYSE:CHPT). Churchill Capital (NYSE:CCIV). Luminar Technologies (NASDAQ:LAZR). Each of those electric vehicle (EV) special purpose acquisition company (SPAC) plays, and many others, have been hit hard the past couple months.
And through no particular company-specific fault of its own, investors can count FSR among those victims.
FSR Stock and the Market
Rising interest-rate and inflation fears and a rotation into more defensive-oriented and blue-chip stocks, have allowed Home Depot (NYSE:HD), Caterpillar (NYSE:CAT) or a tried-and-true tech giant such as Microsoft (NASDAQ:MSFT) to continue notching record highs in 2021.
But the price action has come at the expense of many of 2020’s biggest and most profitable thematic investment schemes known as EV SPACs.
Toss in additional supply-chain worries headlined by semiconductor chip shortages and EV SPACs have endured an extra burden. No matter if those greener tech companies are in the manufacturing process or still mostly fabricating distant dreams of what might be, it’s been a tough stretch for FSR and its peers.
Today and representative of those challenges, shares of Fisker are off about 6% on the year. That, of course, is in stark contrast to the Dow Jones gain of 11%. Not to mention even heftier aforementioned technical leadership in HD, CAT and MSFT.
More unfavorably, but also common among EV SPACs, FSR stock has also lost 62% of its valuation in less than two months at its recent lows. Looking down the road though and possibly as important, unlike a year ago when spelling out longhand SPACs or EVs was required to clarify, maybe appreciatively investors can recognize, “it is what it is” after “it”, i.e. EV SPACs, were shaping up like a bubble.
Fisker Weekly Price Chart
Source: Charts by TradingView
Fisker. It would be irresponsible to not mention Tesla (NASDAQ:TSLA) in the same breath. The reason, of course, is the company’s first luxury EV is set to compete against the auto giant. Moreover, even the market’s 800 pound gorilla has been facing many of the same challenges as FSR and mind you, on a much larger scale.
The good news, if any? FSR’s business savvy, “asset-light” outsourcing production model won’t have any rubber hitting the road until late 2022 at the earliest. All of the current worries surrounding the EV market could be largely or even entirely in the rearview mirror. That being said, today’s price chart offers a nice spot to pick up a growth story at an attractive-looking discount. And, possibly paving the way for a rollout of the Fisker Ocean.
Technically and as our well-illustrated weekly chart of FSR stock reveals, shares are stationed in an inside candlestick following a doji pivot low centered on the 76% retracement level. This also is on the edge of picture perfect, but typically unrealistic channel support. There are ample signs FSR could be turning the corner. They include continued robust signs of buying interest indicated by the green arrows. Also, an oversold bullish crossover.
What to Do With FSR Stock
The advice right now is to wait for price confirmation through last week’s doji high.
Should a trigger occur, rather than purchase FSR stock, an out-of-the-money bull call spread looks approachable. The August $17.50/$22.50 combination is one limited and reduced risk vertical of this type that’s well-suited to an improving price chart.
As well and smartly, this position also contains damage with no unwanted surprises should future crash test dummy challenges lay ahead.
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.