- Fisker (FSR) did not report impressive numbers in the results but it has the potential to turn profitable.
- FSR stock may have hit the bottom and could be ready for a rebound.
- Buy the stock below $12 and hold for the long term.
Electric vehicle maker Fisker (NYSE:FSR) is in the early stages of growth, and it failed to impress investors with the revenue numbers. The company generated a revenue of $12,000 in the quarter, much lower than the $41,000 it generated in the previous quarter, and that’s been bad news for FSR stock.
Understandably, the market isn’t happy with the numbers and FSR stock is being punished. The stock is down from $20 to $10 in the past six months. I love EVs and I believe they are the future. When a company has a vision, all it needs is execution, and this is where the real game begins. For Fisker, execution will be key.
In my previous coverage of the stock, I had mentioned that investors should only put their money in Fisker once the company begins production. For this EV maker, it is all about the products and the production timeline. I am certain it will make a profit in the long term, but if you are buying FSR stock now, buy it only for the products and its potential to meet the schedule.
Production Schedule Will Be the Key to Success
Fisker plans to triple the production of the Ocean SUV model starting from 2024 with the contract manufacturer Magna. A company will only plan to triple production when it is certain of the fact that the demand will be on the rise. The production at the Magna plant will begin in November 2022 and 2023 will be its first year of production where the company plans to manufacture 50,000 cars.
The company will begin production of the second vehicle, Fisker PEAR, in 2024, and it will have a base price of $29,900. It plans to build at least 250,000 vehicles a year after the plant is ready for production.
Fisker has two additional models planned which will be introduced at a later date. The company has received more than 40,000 reservations for the Ocean ,and with high reservations, the potential of revenue generation is also high. It will be interesting to see how many turn into actual orders.
The Bottom Line on FSR Stock
Credit Suisse is bullish on the sector and has an “outperform” rating for the stock. Analyst Dan Levy has a price target of $20 on FSR stock and believes that the company is ready to capitalize on the increasing EV inflection. However, the analyst added that the company is currently under pressure due to the unfavorable market for long-dated narratives.
The stock has been consistently dropping and is trading below $15 since January. I believe FSR stock has bottomed out and it is ready for a rebound.
All EV makers are currently facing trouble due to supply chain issues, and this will affect Fisker as well. It might not pick up the pace immediately, but its long-term story looks interesting to me. The company is on an expansion spree and is looking to increase production rapidly. This will benefit FSR stock in the long term.
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.