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FSR Stock Alert: Fisker Terminates Distribution Agreement


  • Fisker (FSR) stock is down about 8.5% on Friday as investors digest developments for the firm’s capital.
  • The decline leaves shares about flat on the week, after hitting multi-month highs on Monday.
  • The automaker also announced a notable convertible debt offering.
FSR stock - FSR Stock Alert: Fisker Terminates Distribution Agreement

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Markets are mixed as bank stocks begin to report earnings, but Fisker (NYSE:FSR) is ignoring all of it. That’s as FSR stock is down more than 8% on Friday and making new session lows through the early afternoon.

Shares are taking it on the chin as investors bemoan the firm’s latest development. That’s as the company announced that it terminated a stock offering. JPMorgan and Cowen were both participating in the offering, but as of July 12, that offer has been nixed.

From the firm:

The Distribution Agreement provided that the Company may sell shares of its Class A common stock, par value $0.00001 per share (“Class A Common Stock”) from time to time for an aggregate offering price of up to $350,000,000 through an “at the market” equity offering program under which J.P. Morgan Securities LLC and Cowen and Company, LLC would act as agent and/or principal (the “ATM Program”). As of July 12, 2023, approximately $23.4 million remained available under the ATM Program.

Further, it added that “as a result of the termination of the Distribution Agreement, the Company will not offer or sell any more shares under the ATM Program.”

What’s Next for FSR Stock Now?

Earlier this week, bulls were celebrating. FSR stock hit its highest level since early March. That came after a one-day surge where shares rallied more than 17% on Monday. On July 13 — just after the announcement of the nixed offering — shares opened higher by 0.4%. Fisker stock even rallied 5.7% at one point during the session.

Interestingly, shares are still up slightly on the week, sporting a gain of about 1.3%. For many investors though, the development is incredibly discouraging.

It doesn’t help that EV stocks in general are struggling today.

Take Tesla (NASDAQ:TSLA) out of the picture, and it’s a tough day for EV makers. Lucid Motors (NASDAQ:LCID), Nio (NYSE:NIO), Rivian (NASDAQ:RIVN) and others are under pressure.

After tagging a recent high at $7.22, bulls are likely most worried about FSR stock unraveling back to the June low. In that scenario, it would send Fisker all the way down to $4.77.

That all said, the company did recently announce a $340 million convertible note earlier this week. The new 0% unsecured notes mature in 2025 and “have an original issue discount of approximately 12%, resulting in gross proceeds of $300M to Fisker.”

The investor can also buy an additional $226,666,667 of the notes over the next six months. On the one hand, that gives the automaker access to more capital. On the other hand, dilution may be a concern and we may be seeing some of that worry manifesting itself in the stock price reaction.

On the date of publication, Bret Kenwell 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.

Article printed from InvestorPlace Media, https://investorplace.com/2023/07/fsr-stock-alert-fisker-terminates-distribution-agreement/.

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