Electric vehicle companies are hot this year, but the industry has had a rough start to 2022 due to several external reasons. Fisker (NYSE:FSR) stock has been under the watch of many investors and the company is making strong strides in the already thriving industry.
Fisker reported fourth-quarter results that were in line with analysts’ expectations, again proving its strength and confirming that the company is on track with the production schedule. That was a good turnaround from Q3, when hadn’t been able to impress investors, and this is when I had written about avoiding the stock. FSR stock was trading at $19 then. As expected, the stock started declining soon after and went as low as $10.
It is trading close to $12 today, much lower than its all-time high of $31. But if you are bullish on the EV sector, it doesn’t hurt to buy and hold FSR stock until deliveries begin. This is when the stock will see a massive surge.
The Future Looks Bright
The company unveiled the Fisker Ocean in November last year and its reservations stood at 30,000 as of Feb. 14. It also has 1,600 fleet reservations for the Ocean, which includes an order of 200 units from ServiceNow (NYSE:NOW).
Fisker also opens reservations for the second product, Personal Electric Automotive Revolution (PEAR), with a starting price of $29,900 in the U.S. for the five-passenger model. It will give a wider choice to the customers and gives the company a chance for a large commercial order. Considering the number of reservations for Ocean Fisker, it can be assumed that buyers are ready to chase luxury and are willing to pay a higher price for the same.
Fisker ended the year with a cash balance of $1.2 billion, which is sufficient to fund the production launch of Fisker Ocean later this year. Non-GAAP operating expenses stood at $458 million, which is in line with the guidance provided by the company in the third quarter. The loss from operations amounted to $133.4 million and the net loss stood at $138.4 million.
For 2022, the company expects the total expenses to be within the range of $715 million to $790 million.
It has also started the production of next-level prototypes at the assembly factory and will soon be able to produce two prototypes in a day. Fisker is on schedule with the production schedule for Fisker Ocean and will begin deliveries in November.
There are 30,000 reservations and the average selling price of the same is $56,000, which means the gross revenue for the company could be close to $1.7 billion. This could be possible as early as next year. This is excluding the commercial orders and the potential to grow in that segment.
The Bottom Line On FSR Stock
Fisker has a solid cash balance, but it is a pre-revenue company. That makes it difficult to judge the future. However, since the company is on track with the production schedule, it does look like the management has everything well organized and sorted. Even if we assume that the reservations do not exceed 30,000, the company has a massive revenue generation capacity.
I do not think FSR stock will rebound and hit new highs anytime soon, but it will certainly grow in the long term. If you are keen on the EV industry, this is one stock to buy and hold for the next couple of years. Tesla (NASDAQ:TSLA) started its journey small and see where it is today!
FSR stock is much lower than its all-time highs and this is a chance to take your position. Anything below $15 is a good bet.
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.