Why Fisker Stock Is Plummeting Today
- Shares of pre-production electric vehicle maker Fisker (NYSE:FSR) dropped more than 8% on Wednesday after Goldman Sachs downgraded FSR stock to “Sell,” slapping a $10 price target on shares which imply 30% downside.
The Background on FSR Stock’s Decline
- Goldman Sachs is concerned about Fisker’s competitive positioning in the electric space.
- Fisker’s first car, the Ocean SUV, won’t launch until the fourth quarter of 2022. It won’t hit mass production until the fourth quarter of 2023.
- Today, there aren’t many strong EV companies out there, aside from Tesla (NASDAQ:TSLA) and Nio (NYSE:NIO). By 2023, there will be many, many more, including more direct competitors with Fisker like BMW and Volkswagen, both of which are electrifying their SUV lineup and will have eSUVs in market before the Ocean.
- Goldman believes that when the Ocean does launch, the eSUV market will be too crowded for consumers really care.
Does It Matter?
- The EV market will be much more crowded by 2023.
- But Fisker has enough differentiating qualities to make the Ocean stand out, even in a competitive market.
- The biggest of these qualities is price. Thanks to the company’s novel platform sharing business model wherein the company is outsourcing essentially everything but the actual car design, Fisker is able to very cost-effectively produce EVs. The result is that the Ocean will debut with a $37,500 price tag before tax incentives are applied, so this will be a $30,000 car when consumers are buying it in 2023.
- BMW’s electric X3 model, the iX3, is for sale today at $80,000-plus prices. The Volkswagen ID.4 has a $40,000-plus price tag.
- Importantly, Fisker is not compromising much on quality to achieve these low prices. The ID.4, for example, has a driving range of just 250 miles. The Fisker Ocean is expected to have a range of up to 350 miles.
- Given these advantages, elevated competition shouldn’t detract too much from the Fisker growth narrative. Long-term, FSR stock still has great potential.
FSR Stock Price Forecast
- We see Fisker stock has materially undervalued at current levels.
- Fisker is a $3 billion EV company. Long-term, we think Fisker will eventually become an affordable, electric version of BMW, with higher margins because of the better unit economics of EVs (rapidly falling battery costs will help EV makers achieve higher margins).
- BMW is a $65 billion car company, even with sales that have been stagnant for years.
- We do not think it is unreasonable to believe that Fisker will one day be selling more than 500,000 cars every year, at strong margins, and be worth over $20 billion.
- In that light, we believe FSR stock is a potential multi-bagger investment opportunity.
The electric vehicle revolution is upon us. By 2040 — if not sooner — every car on the road will be powered by clean energy, and most will be powered by plug-in batteries.
Accordingly, electric vehicle stocks represent some of the best long-term investment opportunities in the market today.
But not all EV stocks are created equally. There are bad EV stocks. Good EV stocks. And great EV stocks.
Fisker is a good one. But not a great one. Who are the great EV stocks?
They are the EV stocks in my Innovation Investor portfolio, which is focused on investing in emerging companies pioneering breakthrough technologies and business models that could change the world. It’s basically a portfolio aimed at finding the next Amazon (NASDAQ:AMZN), the next Facebook (NASDAQ:FB), and the next Tesla (NASAQ:TSLA)… before everyone else.
Fisker doesn’t quite fit that billing. It will be a tour de force in the EV market. But it’s not the next Tesla.
To get the names, ticker symbols, and key business details of the best EV stocks to buy today for potential 10X stock picks, click here.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
By uncovering early investments in hypergrowth industries, Luke Lango puts you on the ground-floor of world-changing megatrends. It’s how his Daily 10X Report has averaged up to a ridiculous 100% return across all recommendations since launching last May. Click here to see how he does it.