What happened
Shares of Fisker (FSRN 12.68%) fell 24.4% in December, according to data provided by S&P Global Market Intelligence, as some of the wind came out of the electric vehicle market's sails.
So what
News out from Fisker wasn't bad in December. The company entered into definitive agreements with Magna to produce vehicles and formed partnerships with Cox Automotive and Rivus for delivery, servicing, and fleet management in the U.K. But that didn't stop the stock from dropping.
Image source: Fisker.
The sell-off was really because investors thought the business may be too highly valued. Fisker is still over a year from delivering any vehicles and is a high-risk stock no matter how you look at it. And sometimes that can cause a pullback in shares.
Now what
Fisker is trying to pull off a unique asset light model in the auto industry that brings both high risk and potentially high rewards. It's contracting out both manufacturing and service, focusing instead on being a brand and design firm. I like the strategy long term, but as a growth stock in a nascent market, it's likely there will continue to be big ups and downs in the stock.
