Fisker (NYSE:FSR) announced on Nov. 19 that it won a ZEVAS Award — the zero-emission awards at the Los Angeles Auto Show — for the best crossover vehicle under $50,000. FSR stock jumped more than 5% on the news.
This is the latest piece of good news for long-time investors. In the last month alone, FSR is up more than 45%. Trading above $20 as I write this, I expect this to be the first of many awards for the Fisker Ocean in 2022 and beyond.
I mean, have you looked at the pictures? It’s a beauty.
At its highest level since March, I believe the days of trading near $10 are in the rearview mirror. If you’ve got a 24 to 36 month holding period, buying at current prices won’t kill you. That said, if you can buy some of its stock in the high teens, you should do so.
Here’s why.
FSR Stock Struggles to Stay Above $20
Over the past 52 weeks, Fisker’s share price has jumped above $20 on four occasions. Unfortunately, all four times, it’s fell back down into the teens. That’s not a bad thing. Ultimately, it will pull together enough buying pressure to keep it above $20.
I suspect that the time will come when it starts delivering vehicles.
As its Nov. 17 press release revealing the production-ready Fisker Ocean stated, it will start production in Austria at Magna International’s (NYSE:MGA) carbon-neutral factory in November 2022.
CEO Henrik Fisker noted the exceptional performance of all four Fisker Ocean trims in the company’s press release:
“The Fisker Ocean Sport will have an expected 0-60 mph time of 6.9 seconds with peak horsepower of 275. The Fisker Ocean Ultra will have an estimated 0-60 mph time of 3.9 seconds, with an estimated peak horsepower of 540 hp. The Fisker Ocean Extreme and Fisker Ocean One will have an estimated 0-60 mph time of 3.6 seconds, with an estimated peak horsepower of 550 hp.”
When you combine the Fisker Ocean Ultra’s price tag of $49,999, with the fact it’s expected to do 0 to 60 miles per hour in under four seconds, and will be able to travel 340 miles on a single charge — Los Angeles to San Francisco is approximately 383 miles — it’s easy to get excited about Fisker’s potential.
Further, when you compare Fisker to competitor Rivian (NASDAQ:RIVN) valued at $105 billion with zero revenue, it does make you wonder if Fisker is being penalized for their CEO’s history. He’s already had one kick at the can with Fisker Automobiles and their Karma luxury sedan. The luxury sedan launched in January 2008, and officially died less than five years later in 2013.
This time, Fisker’s asset-light business model and partnership with Magna look much more solid.
Fisker Could Race to New Highs
InvestorPlace’s Bret Kenwell recently stated that Fisker stock could race to new highs due to the general enthusiasm surrounding electric vehicles at the moment. Further, with a 2023 sales estimate of $2.2 billion, its forward price-to-sales ratio of almost 3x could prove to be quite the value in two years.
On Nov. 2, Fisker announced another piece of the production puzzle, signing a supply agreement with Contemporary Amperex Technology Co. Ltd. (CATL). The Chinese company will supply two batteries. The first will use a lithium iron phosphate (LFP) chemistry which will be less expensive and provide less range. And the second, will be a more expensive battery and will have a nickel-manganese-cobalt (NMC) chemistry which should provide a greater range.
“Securing this supply agreement with CATL is another important step in the development of the Fisker Ocean and achieving our battery performance objectives,” said CEO Fisker. “By utilizing multiple chemistries and designing an extremely efficient pack, we will be able to achieve our targeted driving range for the Fisker Ocean Sport and bring segment benchmark-driving range to the longer-range versions of Fisker Ocean.”
The Bottom Line
As my colleague stated, Fisker remains a speculative investment because it won’t generate any actual revenue until 2022. Further, the competitive landscape gets more challenging by the day. Not every EV startup is going to make it to the 2030s and beyond.
The battery announcement is another sign that Henrik Fisker and his team have their act together. I continue to watch with interest as it moves toward actual production this time next year.
It’s a long-term speculative buy.
On the date of publication, Will Ashworth 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.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.
