Fisker (NYSE:FSR) bulls have had little to cheer about the last three months. However, on the heels of two significant announcements, it appears that FSR stock may have reached bottom. But challenges remain for the nascent electric vehicle (EV) manufacturer. So what can Fisker do for an encore?
FSR stock was trading above $30 as recently as February 2021. But less than three months later it was trading below $10. That put it below the price it debuted at on Oct. 30, 2020.
One reason that is given for the decline in FSR stock is that it fits into the electric vehicle and special purpose acquisition company (SPAC) sectors. Both sectors have lost the favor of investors in 2021. I tend to think it’s the former more than the latter. EV stocks went bananas after the election on what can only be described as irrational exuberance.
However, in the light of day, investors are realizing that the electric car revolution may still be several years away. And that is putting pressure on EV stocks.
2022 Can’t Get Here Fast Enough
The shift towards electrification is happening; but it may not happen as fast as we think. And a company like Fisker is telling investors just that. There’s a reason that its first model the Ocean won’t be in production until the end of 2022.
There’s more to the EV story than just building a car, which is daunting enough. Battery development remains a hot topic. And even when a battery solution is found, there’s a whole charging infrastructure that must be expanded upon.
Wooing a Key Demographic
One thing that immediately jumped out at me about Fisker’s approach to the EV market is that it knows its audience. The company is pledging to build the world’s most sustainable vehicle.
As I wrote in a prior article, Fisker pledges that the Ocean’s design will include recycled materials from the ocean. Fisker is also proposing a full-length solar roof option that could provide up to 1,000 additional free miles every year. While I still believe there are concerns about how much of Fisker’s design makes it into production, the company should get the benefit of the doubt.
And then there’s the no-contract flexible lease model that will essentially let consumers lease the Ocean for as long as they want.
Checking More Boxes
As a pre-revenue company there’s nothing Fisker can do in terms of its financials that will change investors’ minds. What it can do, however, is convince investors that it will be able to launch its products on time.
But don’t take my word for it. Here’s what Henrik Fisker had to say in an interview with CNN:
“It’s going to be a tough two years because we’re going to wait for this vehicle to come out and we’re going to be scrutinized,” said Fisker. “And there’s not much we can do to prove people wrong until we bring out the car.”
That’s the effect that the Foxconn and Sharp announcements are having for FSR stock. It’s galvanizing retail investors in their conviction that Fisker will go into production as scheduled.
The question that’s hanging in the air is what’s next? The company’s earnings aren’t likely to provide any new information. So what’s the next catalyst for FSR stock? When can they check that next box?
FSR Stock Looks Good in this Range
When I look at the FSR stock chart, I see a stock that is showing all the signs of consolidating into a range. This makes sense. The company is at least 18 months away from bringing in revenue and there’s a lot that could still go wrong.
One of those obstacles that I’ll admit I didn’t consider was brought up by Josh Enomoto. The global chip shortage may cause production delays even with the Ocean not being slated for production until the fourth quarter of 2022.
Still, if the recent announcements do give FSR stock a solid level of support, then it could be worth nibbling on. This is still a speculative stock, and a lot can go wrong between now and the end of 2022. However, with the immediate threat of the stock going into single digits looking to have passed, it might be worth a closer look.
On the date of publication, Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Chris Markoch is a freelance financial copywriter who has been covering the market for seven years. He has been writing for Investor Place since 2019.