Shares of Fisker Inc. continue to decline, falling below $1, after the company lost the support of its most optimistic analyst. The analyst cited the company’s ongoing “unanticipated growing pains” as the reason for his loss of confidence.
In a client note on Wednesday, TD Cowen analyst Jeffrey Osborne expressed concerns about Fisker’s ability to deliver on its promises. The analyst noted the inconsistency in the company’s delivery cadence, a shift in distribution strategy, and an investigation into the braking performance of its flagship model, the Fisker Ocean. These factors led Osborne to downgrade his rating on the stock from outperform to market perform. Furthermore, he revised his price target down to $1, making it the lowest among the 13 analysts surveyed by FactSet who cover Fisker. Previously, the highest price target had been $11.
Fisker shares (FSR) have experienced a significant decline, plummeting 7.4% toward a record low during afternoon trading. This follows Tuesday’s closing price below $1, which was a historic low for the company. The declining stock price was exacerbated by reports of an investigation by the National Highway Traffic Safety Administration (NHTSA) into the Fisker Ocean’s braking performance.
Despite the setbacks, Osborne acknowledged that Fisker still possesses potential in the electric vehicle (EV) market. However, his wavering confidence reflects the challenges the company must overcome to succeed. Fisker is based in California but has remained silent on the reports regarding the NHTSA’s probe.
Stay tuned for updates on Fisker’s progress as it addresses these critical issues.
Regulatory Probe and Delivery Delays: Implications for Auto Manufacturer
In recent news, there has been a regulatory probe by the National Highway Traffic Safety Administration (NHTSA) regarding an auto manufacturer. While such investigations are not uncommon for auto manufacturers, this particular probe could have a significant impact on investor sentiment and the company’s operations.
The analyst, Osborne, suggests that these regulatory probes usually have minimal financial consequences. However, in this case, the NHTSA’s investigation may result in “material delays” for the company. This is concerning considering the company’s “sporadic” delivery-to-production ratio. Osborne believes that these delays could further erode investor confidence and lead to additional challenges for the company.
Furthermore, there has been a shift in the company’s distribution strategy, as mentioned by Osborne. The company recently decided to abandon its direct-sales model and adopt a new dealer-partnership business model. While this strategic shift may have its merits, Osborne points out that it will likely add pressure on the company’s profit margins. Additionally, this change will require navigating through “incremental state regulatory approvals.”
Adding to these challenges are the mixed reviews of the company’s vehicles and the ongoing NHTSA probe. Osborne predicts that these factors will aggravate the delivery delays experienced by the company in the coming year.
In response to these developments, Fisker, the auto manufacturer in question, has revealed that it is in advanced negotiations with prominent dealer groups for potential partnerships. Notably, the company states that the National Automobile Dealers Association has shown enthusiasm for its strategic shift.
In terms of stock performance, Fisker’s shares have shown a significant decline of 85.4% over the past three months. In comparison, the Global X Autonomous & Electric Vehicles ETF (DRIV) has experienced a milder decrease of 3.4%, while the S&P 500 index (SPX) has seen an 8% increase during the same period.
Overall, this regulatory probe, coupled with delivery delays, poses significant challenges for the auto manufacturer. The impact on investor sentiment and the company’s future remains uncertain.
