Will Fisker’s Ocean EV Keep the Company Above Water?

Highly-touted EV play Fisker (FSR) has made numerous headlines in recent days. This post-SPAC has been in the news thanks to its EV offerings. FSR stock has done quite well in recent trading sessions, moving roughly 20% higher in a matter of a few days.

It’s important to keep FSR stock in context.

Fisker’s stock price has fluctuated wildly this year, much as other SPACs and post-SPACs have. A rapid surge in early-2021 took this stock to a high of nearly $32 per share, only for these gains to be quickly erased. In fact, this three-bagger actually dipped below its SPAC IPO price of $10 just a week ago.

Today, investors can buy shares of FSR stock at around the $12 level. For some, this is a discount that’s still too cheap to ignore.

What can investors make of this price action?

Fisker’s Demand Numbers Paint an Interesting Picture

Investors in Fisker may be well aware of the company’s proposed product offering and price points. Indeed, Fisker’s Ocean electric SUV is as attractive from a design standpoint as it is attractively priced. The Ocean SUV is priced at under $30,000 after factoring in U.S. Federal tax credits. That sort of price point makes this the electric SUV for the masses, or at least Fisker hopes it is.

As a combined offering with Canadian auto manufacturer Magna International (MGA), Fisker’s Ocean SUV is slated for production around November 2022. So, we’re still a little more than a year away from seeing the real deal on roads everywhere.

Impatient customers do have the option of pre-ordering their Ocean SUV at present. Initial pre-order data from February suggest Fisker has more than 11,000 pre-orders worldwide. These numbers indicate that demand exists for the company’s product line. However, investors may have expected more, as indicated by the company’s stock price in recent months.

Additionally, some investors are not so bullish on these initial pre-order data. For many investors, having a $250 deposit which is almost entirely fully refundable (minus a 10% administration fee) makes the commitment essentially a non-commitment. Sure, $25 is money, but it’s not a large enough sum to suggest that those with Fisker reservations won’t balk when it comes time to pony up the cash, especially once other EV options flood the market.

On this front, time will tell whether the pre-orders result in actual vehicle deliveries.

Subscription Model Intriguing

Like some of its innovative EV peers, Fisker has proposed a subscription model for its Ocean SUV. Initial pricing for this model would cost prospective lessees $379 per month. Subscribers would be allowed 30,000 miles per year, with maintenance and service included in the plan. A $2,999 up-front payment would be required. Fisker has stated that those with approved credit could finance this down payment.

That all sounds great, as subscription models are certainly one way of increasing initial demand for a given product line. Furthermore, the company is hoping its recently announced partnership with U.K.-based subscription service Onto will drive increased demand for its product line.

However, as we’ve seen from pre-revenue competitors such as Canoo (GOEV), business models can change. Canoo has moved away from subscriptions and automaker partnerships and toward fleet sales. Right now, Fisker’s business model, production plans, and pre-order data are still in the idea phase.

That said, this partnership appears to cement Fisker’s commitment to its subscription model. Accordingly, investors seem to be sleeping better at night. A double digit percentage move in the price of FSR stock on the announcement appears to indicate this.

What Analysts Are Saying About FSR Stock

According to TipRanks’ consensus analyst rating, FSR stock comes in as a Moderate Buy. Out of 9 analyst ratings, there are 5 Buy recommendations, 3 Hold recommendations, and 1 Sell recommendation.

As for price targets, the average analyst price target is $25.14. Analyst price targets range from a low of $10.00 per share to a high of $40.00 per share.

Bottom Line

Fisker’s product line and price point certainly appear attractive to the average Joe looking to travel in style. Indeed, there’s reason to be optimistic about Fisker’s future prospects.

However, this is an early-stage player in a growing EV market. The extent of the future competition in late-2022 and beyond will likely change the comparable value proposition of Fisker over time.

Accordingly, it’s okay to be on the sidelines with this stock right now. It seems cheap, but it appears the market is pricing in various execution risks with this stock. The safer bet may be to wait and see how production goes before diving in. After all, there’s going to be a long road ahead until production, and the market is impatient right now.

Disclosure: Chris MacDonald held no position in any of the stocks mentioned in this article at the time of publication.

Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.