Is Fisker (NYSE:FSR) biting off more than it can chew? It’s a fair question, considering FSR stock is down more than 30% over the last six months.
The fledging electric vehicle (EV) company hasn’t brought in any revenue yet. It hasn’t built or sold a finished vehicle. But Fisker has embarked on a path that even its executives call “quite unique.”
I get that Fisker is an appealing company, particularly for investors who are looking to get in on the ground floor of the next Tesla (NASDAQ:TSLA). Anyone who buys FSR stock at today’s prices of roughly $14 is hoping for a growth spurt that parallel’s Elon Musk’s powerhouse.
I mentioned when I wrote about Fisker last month that investors need to have a great deal of faith in the company to buy FSR stock. And they need to have a strong tolerance for risk because this is a ride that will see plenty of ups and downs.
But if you take the time to look carefully at the risks, you may decide that FSR stock is one for you.
Let’s take a look at one of those “quite unique” factors that may make Fisker a risk – or set it up for greater rewards.
Fisker’s Twin Approach
One of the most interesting things about Fisker stock is that the company is attempting to build two different vehicles at the same time. Rather than launching one EV and using the lessons learned to refine its processes, it’s jumping in with both feet to build two distinct vehicles at the same time.
Fisker is working with Magna International (NYSE:MGA) to build its first vehicle, the Fisker Ocean SUV. The vehicle is being built in Europe with a starting price of $37,499 – a little upscale for SUV prices. The vehicle is expected to start rolling off assembly lines in Austria in the fourth quarter of 2022.
“Magna’s proven capabilities, particularly in electric vehicles, form a strong basis to support Fisker with world class engineering and manufacturing of the Fisker Ocean,” said Magna Steyr President Frank Klein.
At the same time, Fisker launched what it calls Project Pear for its second vehicle. That’s an effort in conjunction with Taiwanese manufacturer Foxconn to mass-produce an electric SUV that will be priced at less than $30,000. If successful, that would open Fisker to a lucrative mid-sized SUV market.
The Project Pear vehicle is slated for release in late 2023.
A Risk? Or a Chance for Greater Rewards?
It would make more sense for a pre-revenue company like Fisker to focus its efforts on a single vehicle. There are inevitably mistakes, processes to refine and best practices created. All of that makes a learning curve that makes the second, third and fourth vehicles easier to produce.
Even Tesla worked on one car at a time in its early days. The company, which was founded in 2003, launched its long-awaited Roadster in 2008. It wasn’t until 2011 before it launched the prototype of its second car, the Model S sedan.
Of course, there are differences as well. Tesla didn’t become a public company until 2010. It also struggled through some legal issues, and with cash flow and liquidity.
Fisker went public through a SPAC merger before it made its first car. And while it’s working on two versions of an SUV, it’s also already flirting with other models. It released an image of a pickup truck. And it has hinted at the idea of a coupe crossover and a sedan.
CEO Henrik Fisker spoke to the company’s multi-pronged approach during the company’s August conference call with analysts:
“The ability to actually execute two vehicle platforms, two different vehicle platforms, in this stage as a startup companies is quite unique. I think it really validates our strategy. I don’t think there’s any startup ever, even EV U.S. startup that actually have developed or started to develop two platforms simultaneously, despite probably having some of them having raised more billions of dollars than we have. And I think it really shows the strength of our business model, the strengths of our team, and of course, the strength of our partnership, because we do have two amazing, two different partners and I think that really sets us apart.”
The Bottom Line on FSR Stock
Fisker is trying to do something that is rarely, if ever, done. It’s creating two completely different vehicles before bringing in any sales.
That’s tough. It’s ambitious.
Investors should prepare for a volatile ride with FSR stock. The company, if its correct on its bet, could see rich rewards.
You just have to decide if your risk tolerance can stomach the trip.
On the date of publication, Louis Navellier did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The InvestorPlace Research Staff member primarily responsible for this article had LONG position(s) in TSLA.
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