Fisker is dividing wall street. On the one hand, the merger confirmation and promising prospects are making investors bullish. Contrast that to the bearish argument where investors see Fisker replicating Nikola’s downfall as opposed to Tesla’s meteoric rise. This article looks to breakdown the Fisker stock forecasts from both the bullish and bearish sides.

Table of contents 

  1. Introduction
  2. Bullish argument
  3. Bearish argument
  4. Summary

Fisker stock forecast – bulls

The attractive low-cost business model 

Unlike other EV companies, Fisker is not vertically integrated and nor are they building dealerships. The unorthodox approach allows Fisker to reduce overhead costs significantly. Fisker is not manufacturing EV cars, unlike Tesla, which had to go through production hell. Hence, Fisker’s argument that they will enter profitability in a shorter time frame than it took Tesla.

Injection of IPO funds 

The reverse merger will see Fisker receive a billion dollars in funds. Considering Fisker is still in infancy the SPAQ funds would significantly aid their progression from the establishment to the growth stage. For example, the capital is intending to go to the design of the Ocean, building the digital billing app, and the experience centres. Essentially the funds would see Fisker go from having a skateboard structure to potentially having a viable EV.

Product pipeline – unique value proposition 

The bulls are championing Fisker’s product for three reasons. These include the claim that it is the world’s most sustainable vehicle, the use of digital billing, and the build through partnerships approach. According to Henry Fisker, the Volkswagen contract will allow Fisker to make electric vehicles in the millions from 2022 and beyond. In which case, the customers pay a lower price tag and Fisker can use the money to improve the interior and exterior design of the Ocean.

Not to mention Fisker’s experience at BMW, Tesla, and Aston Martin should see the Ocean live up to its hype. Consequently, eyeballs should be on the Fisker Ocean in the lead to its release in the fourth quarter of 2022. However, the dark side of Fisker’s automotive history is discussed in the bearish section.

Furthermore, Fisker will allow customers to lease their electric vehicles online and return after any given time period. The expectation is for the leasing price to be the most competitive in the EV market. Essentially, Fisker’s pricing model is targeting future consumers who prefer accessibility and use over ownership.

Fisker stock forecast – do the bears have strong rebuttals?

Fisker’s poor track record 

The bears use Henry Fisker’s dark past as their main counterargument to the bulls. It all started when Fisker automotive began delivering the world’s first luxury plug-in hybrid car in 2011. However, in 2012 Fisker automotive’s battery supplier entered bankruptcy. Not to mention the company recalled hundreds of vehicles for battery fire, which management knew about. Consequently, the company put chains on production and ended up selling the company to a Chinese auto part conglomerate. To add insult to injury, Tesla and Aston Martin sued Fisker automotive for allegedly using its technology.

Despite the first business fallout Henry Fisker set up shop again under the name Fisker Inc. It seems the new business brought over the red herrings, as Fisker was sued for misleading investors in 2013. The lawsuit arose because Fisker kept the government’s $529 million loan rejection quiet for a year. Overall, the dark past of Fisker is showing more commonalities with Trevor Milton and the Nikola demise than that of Elon Musk and Tesla. Henry’s retort is that the past failures provide him and now Fisker Incorporated invaluable experience.

Fisker’s financials

The major financial flaw is that Fisker’s revenue is zero and it plans to stay that way until 2022 (Ocean SUV release). Fisker has no revenue because they do not have any EV products ready for the market, which is ringing Nikola motor alarm bells.

Fisker’s unsecured value proposition 

Fisker is entering the EV space, not as a manufacturing company. Instead, they are an EV orchestrator who is using strategic partnerships to build their electric vehicles. While the plan sounds appealing investors must not write off the potential shortcomings. For example, if Fisker fails to secure said partnerships, with Volkswagen for example, then the Ocean dream would be delayed or at worst denied. Thus, the bears argue Fisker’s VP is built on promises versus concrete signatures. Much like a straw house versus a brick house.

 

CNCB interview with Fisker CEO Henrik Fisker

Summary

Before I begin, I remind our viewers that this is not financial advice. Instead, the information above is an investment commentary from extensive research.

Overall, you have an EV company that is surging over industry hype, and its recent SPAQ confirmation. The stock price could continue to rise into and in 2021, in which the bulls have relatively sound arguments. However, the lack of fundamentals, such as products on the market and revenue, should be a red flag for most investors. If we were to create a Fisker, Tesla, and Nikola venn diagram, the company is strikingly similar to Nikola, which we all know how it ended up. Hence the bears have more weight for the long-term future for now (opinion not advice). However, if Fisker landed their intended partnerships, allocated SPAQ funds wisely, and the Ocean lived up to its potential, then the EV company would be worth watching.

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The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

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