Fisker Q4 Earnings: Wait For A Pullback (NYSE:FSR)

Back in January, I discussed why Fisker (NYSE:FSR) was one of the names that intrigued me the most this year. The up and coming electric vehicle maker is expected to ramp production of its Ocean SUV throughout 2023, with plans to launch its second vehicle next year. Shares have surged in Monday trading as plans seem to be on track, but I think investors might be able to find a better entry point in the coming months.

The company announced its Q4 results before the bell on Monday, and the headlines showed top and bottom line misses. Of course, Fisker is not really generating any meaningful revenues at the moment, and thus it is losing a lot of money on a GAAP basis. However, the company did announce that full-year 2022 total spending came in at just $702 million, below the $715 million to $790 million anticipated range.

The company reiterated its 2023 production forecast for up to 42,400 units of the Ocean. This could vary though, based on supply chain issues and the timing of homologation testing that’s expected to be completed in March. One that process is done, Fisker will be able to sell in over 20 countries, with the current plan being as follows:

US, Canada, Austria, Germany, Norway, Denmark, Sweden, and France, followed by UK (right hand drive), Switzerland, Netherlands, Belgium, and India (also right hand drive). Sales in additional countries, including China are expected in 2024.

Depending on the sales mix across the Ocean’s different available variants, Fisker should be sold out into the first half of 2024. The Q4 release stated that reservations and orders were approximately 65,000 as of February 24th. While that number is still growing, the pace of growth has slowed a bit as the table below shows. Since late October, the number has increased at less than 1,000 units a month, a trend that will be worth watching in the next few months.

Just a few days after my previous article on Fisker stock, there was a major development in the EV space. Sector leader Tesla (TSLA) announced significant price cuts across its entire vehicle lineup in the US and Europe, following a previous price drop in China. That made vehicles like the Tesla Model Y even more affordable when combined with the new tax credit from the Inflation Reduction Act. There is also an expectation that Tesla will unveil a much more affordable electric vehicle on Wednesday at its Investor Day, where it has announced plans to detail its third generation vehicle platform.

In the near term, I’m watching to see if Fisker continues to raise new capital. The company burned through more than $640 million in cash during 2022, and there will likely be more burn this year until revenue gets to a certain point. Management has guided to total operating expenses and capital expenditures of $535 million to $610 million this year, but it also expects gross profits of 10%, plus or minus 2%. Cash and equivalents were $736.5 million at the end of last year, excluding approximately $28 million of VAT receivables delayed to 2023. The company raised $57 million through its at-the-market equity sales program in Q4 2022.

As for Fisker shares, they are up more than 26% so far on Monday, trading around $7.20 a share. That’s a little bit more than where they were when I wrote my previous article, but we are a little closer to the start of Ocean sales. The average analyst price target of $12.44 represents significant upside from current levels, but I’m always hesitant to recommend buying a stock on such a large one day pop. With a lot of competition in the near term plus the potential need for more capital to get through 2024, investors might be able get a better entry point.

In the end, shares of Fisker are surging on Monday after the company’s Q4 report. The company did miss street estimates, reporting another large quarterly loss, but we’re getting closer to the start of Ocean sales. The electric vehicle name has an interesting future lineup planned, and the valuation isn’t terrible at this point. However, with the potential for some bumps in the road as production ramps and perhaps more capital needed, I think investors should wait for a pullback if they are looking to buy.