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Why Fisker Stock Crashed in December

By Howard Smith – Jan 6, 2022 at 6:03AM

Key Points

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The EV maker and its manufacturing partner plan to begin production of the Ocean SUV in November 2022.

What happened

Electric vehicle maker Fisker (FSR 3.49%) hasn't begun producing its electric Ocean SUV yet, but its stock still seems to be trading with its peers that are in commercial production. That means plenty of volatility with sharp spikes and big dips. December was a down month, with Fisker shares lower by 26.5% for the month, according to data provided by S&P Global Market Intelligence.

So what

That volatility hasn't really amounted to much movement over the two months, however. In fact, after a big jump in November, Fisker stock has only moved down 2% in the last two months of 2021. The December decline didn't come from any particular negative company news. It continues to make progress toward initial vehicle production later this year with its manufacturing partner Magna International.

rear view of light grey Fisker Ocean SUV with dog looking out back window.

Fisker expects to begin production of its electric Ocean SUV in November 2022. Image source: Fisker.

Now what

CEO Henrik Fisker expects the agreement with Magna to be a competitive advantage for the company. Fisker will match software engineers in California with Magna's manufacturing team in Austria to produce its vehicles.

One example of that advantage that Fisker recently pointed to is the driver assistance system that it is developing. It will include what the company believes will be a first-to-market digital-imaging radar system. When highlighting the technology recently, Henrik Fisker said in a statement, "Our asset-light, rapid-product-development business model enables us to bring these state-of-the-art active safety systems to market earlier than our competition."

Fisker is still a speculative, pre-revenue company, however. And many growth and tech stocks with high valuations and/or low earnings were out of favor in December. Investors should expect high volatility to continue with Fisker stock, at least until it begins production later this year.

For now, the company remains well capitalized, expecting to end 2021 with $1.19 billion in cash. As of Jan. 2, it reported having more than 23,500 reservations for the Ocean SUV, including 1,400 fleet reservations. Fisker said interest had picked up as 2021 progressed, with reservations jumping 26% in November and December. The ultimate proof of concept will come later in 2022 when production and customer test drives begin.

Howard Smith owns Magna International Inc. The Motley Fool recommends Magna Int'l. The Motley Fool has a disclosure policy.

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