FSR Stock: Why Fisker Shares Are Plunging Today

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With scant analyst coverage, a recent ‘sell’ call may be chasing away FSR stock buyers

By Robert Lakin, InvestorPlace Contributor Dec 10, 2020, 10:25 am EST

Shares of Fisker (NYSE:FSR) are off more than 10% at the Thursday open. The drop follows two news items on Wednesday: Car designer and company CEO, Henrik Fisker, announced he has started designing his next vehicle; and, Wolfe Research initiated coverage on the electric vehicle maker with a “sell” rating.

The Fisker logo hangs on display at the November 2011 International Auto Show.

Source: Eric Broder Van Dyke / Shutterstock.com

Fisker in late October merged with blank-check company Spartan Energy Acquisition. Shares had climbed nearly 60% since the merger was completed on Oct. 30.

The selloff comes after FSR stock was hot earlier this week after the company announced two new partnerships that have FSR stock climbing higher.

Building a Different Type of EV Maker

Fisker is working to differentiate itself from other EV makers through its asset-light model. This means that the company is working to minimize its risks and outsource many of the other critical automaker services. Importantly, this model has so far attracted interest from analysts and investors, especially as other startups work to build their factory footprints.

The EV maker’s inaugural offering is an affordable, yet premium SUV called the Ocean, made from sustainable materials. Ocean, though, won’t be available until 2022.

Wall Street’s Scant Coverage

The “sell” rating from Wolfe Research comes as a slap in the face for Fisker’s recently hired VP of investor relations, Dan Galves, who joined the EV maker from Wolfe earlier this year, where he covered (wait for it…) the auto industry.

Fisker faces an investor challenge because there are so few Wall Street opinions out there yet for investors to dive into. As Barron’s writer Al Root noted on Nov. 27, while the Street is “getting increasingly bullish about U.S. electric-vehicle stocks” the lack of coverage is a “reason for caution.”

Also, SPAC investors have shown themselves to frequently not stick around too long after the merger. The process of “de-Spacing” — where the target company merges with a special purpose acquisition company — requires an intense program of investor engagement in order to keep those original holders onboard, IR Magazine noted.

The Bottom Line on FSR Stock

So what do investors need to know now? FSR stock fundamentals seem intact and still solidly in the middle of its trading range since the merger. Dips are opportunities, and investors may be looking at one here on what looks like will be a mixed day for the broader markets.

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