Fisker Faces Uphill Battle in the Electric Vehicle Market

Electric-vehicle start-up Fisker has experienced a challenging period in recent months, and it seems that the road ahead won't be any smoother.

On Wednesday, TD Cowen analyst Jeffrey Osborne downgraded Fisker stock from Buy to Hold. He also adjusted his price target significantly, reducing it from $11 to just $1, marking a decline of more than 90%.

Osborne highlighted the company's ongoing "growing pains," noting that Fisker has been struggling to meet delivery estimates amidst a softening of the overall electric vehicle (EV) market.

While the total sales of battery-electric vehicles in the U.S., Europe, and China reached approximately 8.7 million units in 2023, reflecting a growth rate of around 33% compared to the previous year, it is important to note that this growth rate is gradually slowing down. Moreover, the market is becoming increasingly saturated with new EV models.

In 2023, Fisker managed to produce 10,142 all-electric Ocean SUVs. However, this figure fell considerably short of the company's original delivery projections. In May, company management had initially estimated that they would deliver between 32,000 and 36,000 EVs in 2023. However, these estimates were continuously revised downwards. By August, the projected range was reduced to 20,000 to 23,000 units, and by November, this range was further slashed to 13,000 to 17,000 units. Finally, in December, Fisker's guidance was lowered to a mere 10,000 vehicles.

It is evident that Fisker has encountered significant challenges in meeting its production targets and has struggled to keep up with the demanding EV market. As the competition continues to intensify and market conditions evolve, Fisker must navigate these obstacles to secure its place in the industry.

Fisker Faces NHTSA Probe Over Braking System Complaints

Analysts have pointed out that Fisker, the renowned automotive company, is facing yet another setback. This time, the National Highway Traffic Safety Administration (NHTSA) is launching an investigation into complaints related to the braking system of Fisker's popular model, the Ocean.

For those unfamiliar, the NHTSA is responsible for managing safety investigations and recalls in the automotive industry. According to their official website, a probe has indeed been initiated to address these braking concerns. It is worth noting that investigations are typically conducted before recalls are issued, and such recalls often involve the replacement or repair of faulty parts. Naturally, investigations and recalls can cause concern among investors, especially when they occur early in a company's lifespan.

As a result, Fisker's shares have experienced a 3.8% drop in premarket trading, now valued at 93 cents per share. This continues the ongoing struggle for shareholders, as the stock has plummeted by approximately 84% over the past three months.

Following this downgrade, only 15% of analysts currently rate Fisker shares as a "Buy." This statistic is in stark contrast to the average Buy-rating ratio of about 55% for stocks in the S&P 500. Additionally, the average analyst price target for Fisker stands at around $2.75, as reported by FactSet.

In closing, it is clear that Fisker's recent troubles with the NHTSA probe have further dampened investor confidence. However, it is important to remember that setbacks like these are a part of any car company's journey, and Fisker has an opportunity to bounce back from this chapter.