A Reversal Is In The Works For Fisker Inc.

Key Points

• Fisker stock fell post-release, but the market regained its footing, and a reversal is still in play. 
• Deliveries fell short due to supply chain issues that should abate by the 2nd half. 
• A ramp in production is expected to produce 6,000 vehicles monthly by the end of the year. 

As tepid as the Q1 results were and as mixed as the post-release action is, the market has not given up on Fisker Inc NASDAQ: FSR—quite the opposite. The charts show a bottom in action and a growing support base at a critical juncture for the business. It’s on the verge of ramping production and the start of widespread deliveries that point to revenue and a positive margin by the end of the year. The first deliveries have already begun, and there might have been more, if not for supply chain disruptions. 

The supply chain has recovered, but shortages and late deliveries continue to plague the EV startups, and Fisker is not immune. The takeaway is the production may start a little later than expected, but a significant ramp is expected by the end of the year. The full-year targets were also dialed back a little, but most market participants were expecting nothing less. With the worst priced in and the outlook still bright, this stock could easily complete its reversal and begin to trend higher by the end of 2023. 

Fisker Falls On Weak Quarter: Outlook Halts Decline 

Shares of Fisker fell in the wake of the Q1 release because deliveries were well-below expectations resulting in revenue of only $0.20 million. That’s more than $2.3 million less than expected due to delayed production start-up and certification nuances. In addition, the company’s loss was wider than expected, resulting in GAAP EPS of -$0.38 or $0.10 less than expected, but this was due to the revenue shortfall. Among the bad news is the right shift in production timeline, which now expects 1400 to 1700 vehicles produced in Q2 and up to 36,000 this year. That’s well below the 42,400 previously indicated but still a robust figure for a budding OEM. 

However, the real takeaway is that production is expected to reach 6,000 vehicles monthly by the end of the year, which would more than double the 2023 projection in 2024. That is expected to drive an 8% to 10% gross margin this year, with the possibility for positive adjusted EBITDA. The caveat is that supply chain issues persist, the timeline may get delayed again, and there is a possibility costs will increase. 

The company’s balance sheet is in OK shape, with over $650 million in cash. The company’s cash burn came in at $83.7 million for the quarter, suggesting they have enough to last until positive cash flow is attained. 

The Sell-Side Is Hanging Onto Fisker For The Ride 

Marketbeat’s analyst tracking tools haven’t picked up any new commentary from the analysts, which is telling itself. The sentiment ahead of the release was a firm Hold with a target more than 100% above the price action, and that has yet to change. The most recent targets are below the consensus, and the low assumes a 30% decline from $6.00, but most current targets are still well above the price action. On the institutional side, they own a small fraction of the company but have been nibbling on balance for the last year. 

The chart shows a nice bottom that began on April 25th in tandem with the 1st European deliveries. The market has since entered a consolidation zone shaken by the results, but bulls remain in control. Support at the short-term moving average shows a growing conviction for higher prices, which may be sparked by news over the next few months. The company is on track to begin US deliveries in June, which would be a significant catalyst.