Why Is Fisker Running Out of Money?


  • Fisker (FSR) is producing more vehicles than it can sell with an inventory of 4,700 vehicles.
  • The company paused production for six weeks beginning on March 18 in order to address its inventory.
  • FSR stock is down by over 90% so far this year.
FSR stock - Why Is Fisker Running Out of Money?

Source: T. Schneider / Shutterstock

Fisker (NYSE:FSR) stock is down more than 90% so far this year and trading below the pivotal $1 level. The past few weeks have been full of bad news for the electric vehicle (EV) company.

Last week, The Wall Street Journal reported that Fisker had hired restructuring advisors in preparation for a possible bankruptcy. In its preliminary fourth-quarter and 2023 full-year earnings, the company warned that there would likely be “substantial doubt” about its ability to continue as a going concern once it files its 2023 Form 10-K. Fisker previously disclosed that it would submit its filing late.

The company also announced a 15% workforce reduction as part of its transition to a dealer-partner model and in order to cut costs.

Why Is Fisker Running Out of Money?

The simple answer to Fisker’s woes is that it’s not attracting enough demand for its vehicles amid an EV price war. Producing vehicles is an extremely cost-intensive process, especially for companies just getting started. In 2023, Fisker produced 10,193 Oceans. However, Fisker only delivered 4,929 of these vehicles.

As of March 15, Fisker had produced about 1,000 vehicles and delivered 1,300 in 2024, bringing its inventory to about 4,700 vehicles. The company believes that these vehicles are worth over $200 million. Beginning on March 18, Fisker enacted a six-week pause on production in order to correct its inventory levels.

Fisker is taking the right steps to cut costs. However, at the same time, it still needs capital to stay afloat. Yesterday, the company announced that it had received a $150 million financing commitment from the sale of $166.67 million of 2024 senior secured convertible note. The sale of the notes is conditional on Fisker filing its 2023 10-K. Once Fisker sells the notes, the holder will be able to convert them into FSR stock at any time. That would equate to dilution for equity shareholders.

In addition, Fisker could be closing on an over $400 million investment from Nissan (OTCMKTS:NSANY), according to Reuters. Nissan is allegedly interested in Fisker’s upcoming Alaska pickup truck. Fisker’s deal with Nissan could close by as soon as this month.

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On the date of publication, Eddie Pan did not hold (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.

Eddie Pan specializes in institutional investments and insider activity. He writes for InvestorPlace’s Today’s Market team, which centers on the latest news involving popular stocks.

Article printed from InvestorPlace Media, https://investorplace.com/2024/03/why-is-fisker-running-out-of-money/.

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