What happened

March was a tough month for momentum stocks, and electric-vehicle start-up Fisker (FSRN) was no exception. Shares of Fisker fell by 39.6%, according to data provided by S&P Global Market Intelligence, despite several Wall Street analysts coming to its defense.

So what

It was an odd month for Fisker, an electric-vehicle company that has been turning a lot of heads in 2021. On March 1, CEO Henrik Fisker tweeted that the company had 13,000 reservations for its Ocean vehicle.

Publicity shot of the Fisker Oean SUV.

The Fisker Ocean. Image source: Fisker.

On March 3, Wolfe Research upgraded the stock to peer perform, saying that Fisker's deal to work with Foxconn on production of a new vehicle "changed the narrative" concerning the company. Citi, meanwhile, raised its price target to $31 from $26 and reiterated its buy rating, citing in part the strong reservation number.

But investors were more focused on a decline in the share price at category leader Tesla, with Fisker and other stocks seemingly selling off in sympathy. There's some logic to it. A lot of new automotive company valuations are set based on the multiple the market assigns to Tesla.

In a month where high-multiple growth stocks were under pressure, Fisker was no exception. The shares, which had almost doubled in the first two months of 2021, are now up only 15% year to date.

Now what

Fisker is off to a good start in April, with investors excited about the potential for investment in electric vehicles and infrastructure that is likely to be part of President Joe Biden's massive infrastructure package. But there is reason for caution as well: On April 27, the 180-day insider lock-up period that was part of Fisker's agreement to go public expires, potentially freeing up 43 million additional shares to hit the market.

This upstart automaker has a lot of promise, but truth is we won't know for sure whether it is able to deliver on that promise for some time. In the meantime, Fisker shares are likely to trade on momentum and sentiment instead of fundamentals. As investors discovered in March, that is likely to lead to considerable turbulence.