Fisker Stock Could Be a Long-Term Buy, But Wait Until You See the Ocean

It was about one year ago when Fisker (NYSE:FSR) stock went public via a special purpose acquisition company (SPAC).

The Fisker logo hangs on display at the November 2011 International Auto Show.
Source: Eric Broder Van Dyke / Shutterstock.com

At that time, the electric vehicle (EV) bubble was beginning to inflate and so did FSR stock, which also became one of the meme stocks. At one point, Fisker was trading at more than $30 a share.  

However, despite two impressive rallies in 2021, FSR stock has failed to hold its gains. And at the time of this writing, FSR stock is down over the last 12 months. It trades today at nearly $14.

That’s not entirely Fisker’s fault. The entire EV sector has lost its luster. But specific to Fisker, production for its debut vehicle the Ocean is not scheduled to begin until the end of 2022.  

A lot can go wrong in one year, but so far Fisker has hit all its important milestones, and its next one could be key to the short-term fortunes of FSR stock. 

It’s debut car, the Fisker Ocean is set to debut at the L.A. Auto Show on Nov. 17. If it passes the eye test of industry analysts, Fisker may start to look a lot better.  

The Nov. 17 date has additional significance. It’s probably not a coincidence that it’s one year to the day that the first Ocean is scheduled to roll off the production line in Austria.  

That’s a long time to wait and a lot can still go wrong. However, we were saying the same thing one year ago. However, Fisker does have a strong cash position and at this time it appears the company will make it into production.  

Will a Strength Become a Weakness?  

One feather in the cap of Fisker is its partnership with Magna International (NYSE:MGA), a recognized EV parts maker. Fisker is not Magna’s only customer. That helps add credibility to Fisker’s timeline.  

Magna is tasked with building the Ocean according to Fisker’s specifications. Those specs include a heavy reliance on sustainable materials. These materials include a vegan (I.e. no leather) interior, upcycled material and fibers, and a solar-powered sunroof. 

I raised a hypothetical question about this relationship in an early article. With supply chain concerns taking center stage, the question still holds true today: what if the design specifications for the Ocean conflict with having a car available for delivery next November?

Will Henrik Fisker delay production to get the car in line with his vision? Or will the car lose some of its cache with its core audience in order to satisfy patient shareholders? 

Maybe another question is how many of those prospective customers are shareholders?  

These may seem like cynical questions I know. I don’t mean it to be. When you get to be a certain age, you realize that practicality often takes precedence over idealistic visions.  

Plus, as  InvestorPlace contributor Vandita Jadeja wrote, Fisker is already beginning work on its next vehicle. As Jadeja points out, it’s a significant risk to be focusing on more than one vehicle at a time. 

Keep in mind that any delay in production will cut into the company’s forecast to deliver 200,000 to 250,000 in sales by 2025.  

FSR Stock Is a Speculative Long-Term Buy 

So there you have it. Fisker has a bullish case, but it will take some time to materialize. However, if you have a high risk tolerance and the patience to wait on it, FSR stock may present an appealing opportunity.  

If you don’t have a position in FSR stock, I’d recommend you wait until after the Ocean debuts at the auto show. Short interest remains extremely high and the slightest disappointment could give analysts reason to short the stock.  

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 InvestorPlace since 2019. 


Article printed from InvestorPlace Media, https://investorplace.com/2021/10/fsr-stock-could-be-a-long-term-buy-but-wait-until-you-see-the-ocean/.

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