The Stock of Fisker Plunges Nearly 40% After the Bankruptcy Report

Fisker Inc. witnessed an unprecedented downturn in its shares on Thursday following reports indicating the struggling electric vehicle (EV) manufacturer's potential exploration of a bankruptcy filing.

‍

According to The Wall Street Journal, Fisker (FSR) has enlisted the expertise of restructuring advisers to evaluate the possibility of filing for bankruptcy, as disclosed by individuals familiar with the situation.

‍

Just two weeks ago, Fisker cautioned that it faced the imminent risk of depletion of cash reserves. Additionally, it disclosed ongoing discussions with a major undisclosed automaker regarding either an investment or collaborative efforts in developing one or more electric vehicle platforms.

‍

The stock plummeted by 50.3% during morning trading, hitting record lows at approximately 16 cents per share. This decline marked its most significant one-day drop to date, surpassing the previous record decline of 33.7% recorded on March 1.

‍

As reported by The Wall Street Journal on Wednesday, Fisker has engaged financial adviser FTI Consulting and law firm Davis Polk to explore the possibility of initiating bankruptcy proceedings.

‍

Fisker made its debut as a publicly traded entity through a special-purpose acquisition company (SPAC) in 2020, earning the moniker "Apple of autos" due to its strategic emphasis on design and consumer-interface elements while outsourcing EV manufacturing.

‍

In late February, Fisker reported fourth-quarter sales totaling $200 million, falling significantly below the FactSet consensus of $327.7 million for the period.

‍

During the quarter, the EV manufacturer incurred a loss of $463.6 million, equivalent to $1.23 per share, in contrast to a loss of 34 cents per share in the fourth quarter of 2023. Analysts surveyed by FactSet had anticipated a GAAP loss of 23 cents per share.

‍

Fisker and its top leadership are no strangers to bankruptcy proceedings. Previously operating as Fisker Automotive, the company filed for bankruptcy in 2013 after six years in operation. Founder Henrik Fisker, a Danish designer, resigned from the company amidst board conflicts just before the bankruptcy. However, he retained certain brand rights and subsequently established and assumed leadership of Fisker Inc.

‍

Over the past 12 months, Fisker's shares have incurred a staggering 97% decline, sharply contrasting with the approximately 31% gains recorded by the S&P 500 index. The stock concluded its inaugural day post-IPO at $10.14 per share, plummeting by 97% from that level by Wednesday's close.

‍