Ocean Interest Electrifies Fisker Stock

Key Points

• Fisker Inc. missed Q4 expectations but rocketed higher on production outlook. 
• Profitability is in the forecast and has short-sellers closing positions. 
• The current risk is that certification will take longer than expected and supply hurdles could impact production. 

Interest in Fisker’s NASDAQ: FSR Ocean line of SUV crossovers has electrified the market. Although the company’s Q4 results were less than desirable, the company revealed growing interest in the vehicle which is excellent news for revenue, leverage, and eventual profitability. The Ocean, designed to be the world’s most sustainable EV, also boasts a solar roof panel that can add 1,500 miles of driving range per year.

The company is simultaneously working toward certification for the Ocean in 2 markets, the U.S. and the E.U., which has it set up to launch in 20 countries this year. The company expects to receive certification this year and for deliveries to start soon after. The takeaway? The EV market is starting to heat up again, and this stock could come to a boil quickly. 

"We are the first startup to homologate two continents simultaneously. We have completed over 250 various tests and the teams are submitting these results continuously to regulatory authorities. The ability to initially sell the Ocean in the US and seven European launch markets is unprecedented and a major de-risking strategy that we implemented from the outset.

This approach offers the opportunity to increase sales and shift vehicles to whichever market has the strongest growth,” says Fisker CEO Henrik Fisker.

Fisker Has Weak Quarter, Guides For Profits This Year 

Fisker had a weak quarter but, to be fair, the company has only just begun commercial production and the vehicles produced are not ready for sale. The company produced $0.31 million, up 675% compared to last year but well below the $1.02 million expected by the analysts.

The company’s GAAP loss was also surprising but mitigated by the fact 2022 adjusted operational costs and CAPEX came in well below the company’s expectations.

This left the cash balance in better-than-anticipated shape and has the company in a good position for 2023. The company has $736.5 million in cash and expects to generate revenue this year, so dilutive actions may no longer be required.  

The guidance for 2023 is favorable but comes with significant risk. The company expects R&D, expenses, and CAPEX from $535 million to $610 or down 13% YOY at the top end.

The difficulty is that vehicle production was affirmed with a top-end near 42,400. This target is dependent on both the certification process and supply chain execution which is the most troubling aspect. The company has made pre-orders to try and alleviate potential problems but there is no guarantee they won’t hit a snag.

The EBITDA guidance is the news that has the market up 25% in premarket action. The company did not give a firm outlook but says a positive EBITDA margin is possible this year.

The Analysts See Higher Prices Ahead 

Marketbeat.com has yet to pick up any new analyst activity, but the signs are clear; the analysts are at least holding this stock and see it trading much higher than where it is. The consensus of 14 analysts is a firm Hold verging on Moderate Buy with a price target down compared to last year.

The price target is down compared to last year but has held steady for the last 3 months and is still expecting a 100% upside for the stock. 

The technical signals are still weak but suggest this stock is at a bottom. The hurdle that needs to be crossed is the 150-day EMA, near $7.85, which may take a little time for that to happen. As good as the Q4 results and outlook are, this company still needs to prove it can produce and deliver cars to consumers. When that happens, a more sustainable rally may form.