With Fisker, Believe It When You See It

With increasing awareness about the impact of climate change, a lot of countries are committing towards reducing the carbon footprint and this has led to a surge in the demand for electric vehicles. That directly impacts Fisker (NYSE:FSR) stock.

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

There is a rise in the demand for EVs and several players have entered the industry with the latest technology and unique models. Fisker is one such automaker that develops an asset light EV model. The company will begin production next year, but it has been the talk of the industry on many occasions. FSR stock is trading close to $15, and it hasn’t moved much in the past few months. 

Over the past six months, FSR stock hit the high of $20 in September and has been declining since then. I believe it is too early to bet on the stock. When the company has not commenced production, you are only betting on the speculation about Fisker Ocean.

With that in mind, let’s dig deeper on FSR stock.

Solid Partnerships 

The company recently announced the establishment of the Fisker Magic Works, which is the speciality vehicle engineering and development division in the U.K. It aims to instill technology, design and innovation in the products through this division. The deliveries of Fisker Ocean will begin in 2023. 

Fisker is making some strong moves in the industry and has also entered in a partnership with British race driver Abbie Eaton for the development of the EV performance dynamics. However, the partnership will only be of use when the Ocean SUV is ready to roll. The company intends to have the first full vehicle prototypes ready by the end of this year. It is an ambitious target and time will tell whether the company meets the target. 

Until then, everything remains on the paper.

Several Uncertainties Before Production Commences  

Fisker is said to begin production by the end of next year and has set heavy targets for each month. It is certainly aspirational, but investors must keep in mind that there could be delays in the production, chip shortage and many other EVs available in the market by the end of next year.

All EV manufacturers are troubled with chip shortage, and it has slowed their momentum. The same could affect Fisker next year. Further, many EV makers are entering the market and there will be massive competition in the industry by the end of 2022. This will give more options to consumers, and they may consider other models instead of Fisker Ocean. 

Price is another factor. EV maker Nio (NYSE:NIO) is preparing to enter the mass market and it will have a price range that is lower than that of its current models. The price point will also have an impact on the consumer’s decision.

With Fisker, there is a long way to go before the car is ready to hit the road. Until then, wait and watch. 

The Bottom Line On FSR Stock

I am not saying Fisker is a bad company. I absolutely love their marketing and advertising efforts that have continued to keep the interest around Fisker Ocean alive. But I will only believe it when I see it. 

If you had invested in FSR stock a month ago, your investment would still be the same. The stock is down slightly over the last 30 days. If you want to grow your money, you need to pick stocks that show signs of growth and it is too early to expect that from FSR stock.

The stock may perform in the long run but now is not the time to pin hopes on it. You can consider the stock next year, when it is close to the production schedule. Until then, avoid FSR stock. 

The company reports third quarter results on Nov 3. 

On the date of publication, Vandita Jadeja 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.

Vandita Jadeja is a CPA and a freelance financial copywriter who loves to read and write about stocks. She believes in buying and holding for long-term gains. Her knowledge of words and numbers helps her write clear stock analysis.


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