Fisker (FSR) unloaded a cache of bad news during its Q4 earnings report yesterday, shaking investors and Wall Street analysts.
Fisker reported that given its financial condition, evolving dealership sales approach, and challenging EV market, it has “substantial doubt about its ability to continue as a going concern” when the company files its official financial statements for 2023. Fisker also said it would reduce its headcount by 15%.
Fisker said it had $396 million in cash at the end of Q4, though $70 million of that is restricted. Fisker said it is in talks with a current noteholder about making an additional investment in the company and that it’s negotiating with “a large automaker for a potential transaction which could include an investment in Fisker, joint development of one or more electric vehicle platforms, and North America manufacturing.”
The Fisker Ocean, the new all-electric SUV from the American automaker, exhibited at Mobile World Congress (MWC) the biggest trade show of the sector focused on mobile devices, 5G, IOT, AI and big data, celebrated in Barcelona, on March 3, 2022, in Barcelona, Spain. (Joan Cros/NurPhoto via Getty Images) (NurPhoto via Getty Images)
While talks of a cash infusion and strategic partnership with an established automaker are welcome news, it wasn’t enough to end doubts of Fisker’s precarious condition. Shares of the EV maker tumbled over 40% in early trade, with shares now stuck below $1 since early January.
Citi analyst Itay Michaeli generally feels Fisker’s lone product, the Ocean EV, holds promise and isn’t surprised that a large automaker is interested in investing in Fisker, but this isn’t enough for him to keep the faith in Fisker.
“Securing such an agreement would likely serve as a major positive for Fisker, but it’s hard to underpin an investment thesis entirely on this, and we would’ve liked to have seen more progress on this front by now,” Michaeli wrote in a note to investors. Michaeli downgraded the stock to Neutral/High Risk (equivalent of a Hold) and cut his price target to $.80 from $4.
In Q4, Fisker reported revenue of $200.1 million, missing Bloomberg consensus estimates for $272.9 million, and a net loss of $463.6 million, much wider than the $82.7 million loss expected.
“2023 was a challenging year for Fisker, including delays with suppliers and other issues that prevented us from delivering the Ocean SUV as quickly as we had expected,” chairman and CEO Henrik Fisker said. “There were a number of unanticipated challenges, including rising interest rates, finding enough skilled labor, and identifying appropriate real estate locations to make the DTC model function effectively.”
Fisker CEO Henrik Fisker introduces the all-electric off-road Ocean called the Force E during its inaugural “Product Vision Day” in Huntington Beach, Calif., on Aug. 3, 2023. (FREDERIC J. BROWN/AFP via Getty Images) (FREDERIC J. BROWN via Getty Images)
Fisker’s challenges in setting up its direct-to-consumer model led the company to seek out traditional dealer partnerships, with the company revealing it now has 12 dealer partners on hand and over 250 dealers interested.
While talk of new partnerships and a dealer sales network is promising, the main concern for investors is Fisker’s lack of cash.
“If the company had ample liquidity through 2025, then risk/reward would arguably be interesting here with the stock having come under significant pressure,” Michaeli wrote. “But with the liquidity runway narrowing and accounting/reporting issues still unresolved, it’s hard to make an investment case here with such poor [near-term] visibility.”
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
