Fisker's Stock Breaks the Buck as It Loses Its Biggest Bull

Fisker Inc. witnessed a further decline in its stock, dropping below $1, as the electric-vehicle (EV) manufacturer faced setbacks and lost a key analyst. The analyst, Jeffrey Osborne of TD Cowen, who had been a strong supporter of Fisker for at least three years, expressed a loss of confidence in the company's performance, citing "unanticipated growing pains" as the primary reason.

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In a note to clients on Wednesday, Osborne highlighted concerns over Fisker's inconsistency in delivery schedules, a shift in distribution strategy, and an ongoing investigation into the braking performance of the Fisker Ocean. Osborne acknowledged Fisker's potential in the EV market but stated that these issues gave him pause in recommending the stock. As a result, he downgraded his rating on Fisker's stock from outperform to market perform. Additionally, he lowered his price target to $1, now the lowest among the 13 analysts covering Fisker surveyed by FactSet, compared to the previous high of $11.

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Fisker shares (FSR) experienced a 7.4% decline, reaching a new low in afternoon trading. This followed a close below $1 on the previous day, coinciding with reports of the National Highway Traffic Safety Administration (NHTSA) investigating safety issues related to the braking performance of the Fisker Ocean.

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Osborne candidly admitted that he had misjudged the timing of Fisker reaching its potential and acknowledged trying to maintain faith in the company's promising product for too long. The regulatory scrutiny from the NHTSA, while common for auto manufacturers, raised concerns for Osborne due to its potential impact on investor sentiment and the likelihood of causing "material delays" for Fisker, given its inconsistent delivery-to-production ratio.

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The analyst also pointed to a notable shift in Fisker's distribution strategy, where the company abandoned its direct-sales model in favor of a new dealer-partnership business model. Osborne expressed concern that this change would not only exert pressure on margins but also require additional state regulatory approvals. Combined with mixed vehicle reviews and the NHTSA probe, Osborne believed that delivery delays experienced by the company would likely intensify over the next year.

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In response to inquiries about the NHTSA probe, Fisker stated that it had no comment at the time. However, the company indicated that it was in advanced discussions with undisclosed "big-name" dealer groups for potential partnerships, and the National Automobile Dealers Association had reportedly expressed excitement about Fisker's shift in strategy.

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The stock's recent performance reflects a substantial 85.4% decline over the past three months, indicating significant challenges for Fisker. In comparison, the Global X Autonomous & Electric Vehicles ETF declined by 3.4%, while the S&P 500 index gained 8% during the same period. Fisker's ongoing struggles and the loss of a bullish analyst have contributed to the uncertainties surrounding the company's future in the highly competitive EV market.

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