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Fisker plummets 34% after warning; CEO hopes to close financing deal with OEM ‘as soon as possible’

Fisker (FSR) released a pile of bad news during its fourth-quarter earnings report yesterday, rattling investors and Wall Street analysts.

Fisker reported that given its financial condition, the changing sales approach at dealers and the challenging EV market, it has “substantial doubt about its ability to continue as a going concern” when the company files its official 2023 financial statements. Fisker also said it is reducing its workforce by 15%.

Fisker said it had $396 million in cash at the end of the fourth quarter, although $70 million of that is restricted. Fisker said it is in discussions with a current bondholder about making an additional investment in the company and that it is negotiating with “a major automaker for a potential transaction that could include an investment in Fisker, the co-development of one or more electric vehicle platforms. and North American manufacturing.”

Reuters reported on Friday afternoon that Fisker was in preliminary talks with Nissan for a $400 million cash injection, giving Nissan access to Fisker’s upcoming truck platform.

The Fisker Ocean, the new all-electric SUV from the American carmaker, exhibited at the Mobile World Congress (MWC), the sector's largest trade show focused on mobile devices, 5G, IoT, AI and big data, celebrated in Barcelona on March 3 .  , 2022 in Barcelona, ​​​​Spain.  (Photo by Joan Cros/NurPhoto via Getty Images)

The Fisker Ocean, the American automaker’s new all-electric SUV, will be showcased in Barcelona, ​​Spain on March 3, 2022. (Joan Cros/NurPhoto via Getty Images) (NurPhoto via Getty Images)

In an interview with Yahoo Finance, Henrik Fisker, CEO and chairman of Fisker, said discussions have been held with an automaker, although he would not confirm or deny whether it is Nissan.

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“What we said is that we are [in] negotiation with an OEM [original equipment manufacturers] for electric vehicle development and U.S. manufacturing, but also for an investment,” Fisker said. “We started talking to several OEMs over six months ago, I think, so we’ve obviously done a lot of work already, so I hope that this deal will close what we are working on as quickly as possible.”

While talks of a cash injection and a strategic partnership with an established automaker are welcome news, it wasn’t enough to end doubts about Fisker’s precarious state. Shares of the EV maker fell nearly 34% on Friday, with shares now hovering below $1 since early January.

Fisker is optimistic about the future despite concerns about a cash crunch and a stock price that is out of line with NYSE rules as it sits below $1.

“I would say [despite] Given the overall EV crisis that is still going on, we continue to see tremendous interest in our vehicles. The EV market has been tough in recent months, but I think with our pivot to this, to the dealer model, we will accelerate our sales even more than we ever have,” Fisker said. A turnover growth of 250% between the third and fourth quarters. With the forecast we are making now, we will continue to see sales growth despite the slump in electric cars.”

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Wall Street reacts to Fisker’s prospects

Fisker CEO Henrik Fisker introduces the fully electric off-road Ocean, called the Force E, during his inauguration Fisker CEO Henrik Fisker introduces the fully electric off-road Ocean, called the Force E, during his inauguration

Fisker CEO Henrik Fisker introduces the all-electric off-road Ocean, called the Force E, during the first “Product Vision Day” in Huntington Beach, California, on August 3, 2023. (FREDERIC J. BROWN/AFP via Getty Images) (FREDERIC J. BROWN via Getty Images)

Citi analyst Itay Michaeli generally believes that Fisker’s sole product, the Ocean EV, is promising and isn’t surprised that a major automaker is interested in investing in Fisker, but this isn’t enough for him to build confidence in Fisker.

“Securing such an agreement would likely be a big positive for Fisker, but it is difficult to fully justify an investment thesis on this, and we would have liked to see more progress on this front,” Michaeli wrote in a note. to investors. Michaeli downgraded the stock to Neutral/High Risk (equivalent to Hold) and lowered his price target from $4 to $0.80.

In the fourth quarter, Fisker reported revenue of $200.1 million, missing Bloomberg consensus estimates of $272.9 million and a net loss of $463.6 million, far wider than the expected loss of $82.7 million.

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Fisker’s challenges in establishing its direct-to-consumer model led the company to look for traditional dealer partnerships, with the company revealing that it now has 12 dealer partners available and more than 250 interested dealers.

While talk of new partnerships and a dealer sales network is promising, the biggest concern for investors is Fisker’s lack of cash.

“If the company has sufficient liquidity through 2025, risk/reward here would arguably be attractive as the shares have come under significant pressure,” Michaeli wrote. “But with the liquidity lane narrowing and accounting/reporting issues still unresolved, it is difficult to deal with such poor [near-term] visibility.”

Pras Subramanian is a reporter for Yahoo Finance. You can follow him Tweet and further Instagram.

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