Fisker, FSR) is one relative newcomer to the EV industry. Fisker is a unique company with EVs that are designed in a way that’s not traditional. They also have a marketing campaign that’s very creative and some engineering talent. This stock should be a top pick for EV enthusiasts.
FSR stock, just like its de-SPAC counterparts, saw a lot of interest in the meme stock rally. FSR stock was trading well over $30 per share in February. FSR stock is now trading at $10 SPAC IPO price.
The company’s new electric Ocean SUVs are expected to be on the market in approximately one year. There is a lot of work to do over the next year before these vehicles can hit the streets. This stock will likely experience volatility during the waiting period.
I remain neutral on Fisker right now. We’ll be discussing the pros and cons as we assess this stock’s value.
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Unique Business Model
Fisker, unlike many early-stage EV companies, has sought out third parties for manufacturing assistance. Fisker is proud to have forged a significant manufacturing partnership with this company. Magna International (NYSE:). Although this agreement is for Europe only, Magna will be responsible for developing Fisker’s driver assistance program.
The business model of this company is intriguing for investors. Some factors are used to determine the value of EV companies. Investors consider several factors when valuing these companies. These include the quality of their underlying brands and the gross margins they have on the vehicles that they produce.
Fisker could potentially enjoy higher margins by outsourcing production as well as much of product development. Fisker, as a brand could reap the rewards of its loyal customers it is looking to grow (a big but), much in the same way that Apple (NASDAQ:), which has a similar business model.
The third-party can take over the manufacturing process, but this will reduce some of the margin. Fisker will no longer be responsible for quality control or other important aspects of the supply-chain.
Fisker seems to be on track to ship its Ocean SUVs into the marketplace by November 2019. Investors may therefore be interested in the growth potential of this stock.
Catalysts for meaningful growth
In July, Fisker’s CEO, Henrik Fisker, unfolded several operational areas at a Magna plant in Austria. This is where the Ocean program will be participating in testing facilities and prototype production.
This stock has seen some improvement in the last few months thanks to a series of announcements about Magna’s manufacturing progress in preparing for Fisker’s Ocean SUV production. FSR stock is down a lot from its June high of $20 per share. FSR stock is currently available for purchase at $13.50 per piece.
Despite this, the stock trades at a premium relative to its SPAC IPO cost. This is because many de-SPAC businesses are selling at a significant discount from this price.
Magna has taken these steps to get ready for the global launch of its Ocean SUV. This follows reports that over 17,000 people have already reserved Magna. This electric SUV is in high demand, with the number of reservations increasing steadily over recent months. It is crucial that consumers demand any brand, especially at this point in the game. Fisker’s attractive retail price of well under $40,000 per vehicle could offer incredible growth potential upon its launch.
Fisker also plans to launch the Ocean SUV featuring Intelligent Pilot. The feature will provide drivers support through over-the air notifications. Customers can also enjoy more autonomous driving levels. FSR makes a compelling bet, thanks to digital imaging radars and additional cybersecurity.
Fisker is like other EV companies, its valuation hinges on the investors’ evaluation of the Fisker’s potential relative to the market. Investors have witnessed what happens when production-related risk is incorporated into various early-stage EV plays, just like Lordstown Motors and Workhorse (WKHS).
Fisker is not currently being shopped by a lot of short-sellers, but this stock will be watched closely by those who want to take advantage of the sector’s potential overvaluation. Investors looking for upside potential on FSR stock need to be mindful of the risk of investing in speculative early stage EV stocks.
What Do Analysts Have to Say About FSR Stock
As per TipRanks’ analyst rating consensus, FSR is a Moderate Buy. From 5 analysts ratings there are 4 Buy recommendations, 2 Hold recommendations.
This stock has an average Fisker price target of $20.33, implying an upside of 50%. An analyst’s price target ranges from $26 per ounce to as low as $16 per ounce.
Fisker Bottom Line
Fisker Ocean’s upcoming SUV model is very intriguing. This vehicle is likely to have a lot of demand, considering its suggested price. FSR stock might be something investors want to keep an eye on.
The fact that the electric SUV is not expected to hit the markets for at least another year means we may be facing a volatile thirteen months. This stock may be a good investment for long-term capital preservation investors who are cautious.
Disclosure: Chris MacDonald didn’t hold any positions in the securities listed in this article at the time it was published.
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