Fisker (NYSE: FSR) stock tumbled 34% on Friday following a bearish outlook from Citi, citing near-term risks.
Fisker (FSR) finds itself at a critical juncture as financial analysts at Citi take a cautious stance, downgrading the electric vehicle startup to Neutral/High Risk. The firm has also slashed slashing the target price from $4 to a mere $0.8 per share. This downgrade comes in light of Fisker’s acknowledgment of potential going-concern risks, announced job cuts, and a temporary halt in investments into future projects until it secures a partnership with a manufacturer.
The company expressed “substantial doubt” about its ability to continue as a going concern when filing its official financial statements for 2023. The concerns were regarding its financial condition, evolving dealership sales approach, and the challenges in the EV market. In addition, the company plans to trim its workforce by 15%.
Fisker (NYSE: FSR) reported having $396 million in cash at the end of Q4, of which $70 million is restricted. Fisker has disclosed ongoing discussions with a current note-holder regarding additional investment possibilities, alongside negotiations with a major automaker for a potential transaction including investment, joint development of electric vehicle platforms, and North American manufacturing.
Recent reports from Reuters suggest that Fisker is in preliminary discussions with Nissan for a $400 million cash infusion, with Nissan potentially gaining access to Fisker’s forthcoming truck platform.
Citi Analysts Take on Fisker Stock
Commenting on these developments, Citi analysts emphasized the challenges ahead, noting that while negotiations with a major OEM are positive, they alone cannot shore up the investment case. Lingering accounting/reporting issues, tightening liquidity, and tepid demand pose significant hurdles.
Citi analysts wrote in a note,
“While the announcement of an investment/partnership negotiation with a large OEM is encouraging, that alone cannot underpin the investment story at a time when liquidity is tightening, accounting/reporting issues still linger and demand not seemingly gaining much momentum.”
They added,
“With heightened NT risks and poorer visibility, it’s hard to make an investment case here.”
Fisker stock, which hit a record low of 38 cents on Friday, faces additional pressure as the company received a notice from the New York Stock Exchange regarding non-compliance with a listing rule.
Moreover, Fisker’s production outlook for 2024 falls short of estimates, with forecasts indicating a production range of 20,000 to 22,000 Ocean vehicles, below the estimated figure of 35,600, according to Visible Alpha data.
Fisker (NYSE: FSR) Stock Reaction
FSR stock plunged 33.74% to close at $0.48 on Friday. The traders had exchanged hands with 363,038,999 (363.03 million) shares compared to the average daily trading volume of 38.54 million.
