Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Why Fisker Stock Is Down Today

By John Rosevear - Sep 16, 2021 at 2:03PM

Key Points

  • A key analyst said that while Fisker seems to be on track, the competitive landscape is getting very crowded.

Motley Fool Issues Rare “All In” Buy Alert

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A downgrade from a well-regarded analyst should be food for thought for investors.

What happened

Shares of electric-vehicle start-up Fisker ( FSR 3.41% ) were trading lower on Thursday after a downgrade from a widely followed Wall Street auto analyst.

As of 1 p.m. EDT, Fisker's shares were down about 6.2% from Wednesday's closing price.

So what

In a new note on Thursday morning that covered several automotive stocks, Bank of America analyst John Murphy cut the bank's rating on Fisker to neutral, from buy, and lowered its price target to $18 from $27.

Murphy isn't completely pessimistic on Fisker's chances. He continues to view the California-based company as "one of the more legitimate" entrants in the universe of electric-vehicle start-ups, in large part because of the company's relationship with major auto supplier and contract manufacturer Magna International ( MGA -0.06% ). But he's more cautious on the company's prospects as the competitive landscape is becoming "incredibly fierce." 

Magna is expected to begin building Fisker's first model, the Ocean electric SUV, before the end of 2022. Fisker has a separate deal with Taiwanese electronics maker Hon Hai Precision Industry ( HNHPF -0.98% ), better known as Foxconn, to begin building a second model in the fourth quarter of 2023.

An orange Fisker Ocean prototype shown parked by the ocean.

The Fisker Ocean is a stylish electric SUV with a starting price under $40,000. Production is expected to begin in November of 2022. Image source: Fisker Inc.

Now what

I think Murphy's take is a reasonable one. While all signs suggest that Fisker is executing well on its go-to-market plan, there's a lot of electric-vehicle competition coming -- and not just from other start-ups.

During its second-quarter earnings report on Aug. 5, Fisker said that it's on track to begin production of the Ocean with Magna on Nov. 17, 2022. That's good news, but it means that the Ocean will be facing direct competition from the likes of Volkswagen ( VWAGY 7.57% ), Ford Motor Company ( F -0.60% ), and Mercedes-Benz, among others, from the moment it begins shipping. 

Any discussion of Fisker's valuation or prospects has to take the likely competitive landscape in late 2022 into account. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Fisker, Inc. Stock Quote
Fisker, Inc.
$18.96 (3.41%) $0.62
Ford Motor Company Stock Quote
Ford Motor Company
$19.84 (-0.60%) $0.12
Volkswagen Aktiengesellschaft Stock Quote
Volkswagen Aktiengesellschaft
$31.91 (7.57%) $2.25
Magna International Inc. Stock Quote
Magna International Inc.
$80.89 (-0.06%) $0.04
Hon Hai Precision Industry Co., Ltd. Stock Quote
Hon Hai Precision Industry Co., Ltd.
$7.60 (-0.98%) $0.07

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/08/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.