What happened

Shares of Fisker (FSRN 2.86%) were hit hard this morning, but it isn't because of the third-quarter report it released last night. The stock dropped 9.5% in early trading but recovered quickly from the day's low. As of 12:05 p.m. ET, Fisker shares remained lower by 2%.

So what

The company's quarterly update didn't contain any market moving information. Fisker still expects production of its electric Ocean SUV to begin later this month. It will initially be produced in Europe by manufacturing contractor Magna International. The biggest news from the report was that Magna has agreed to purchase a commercial fleet of 15 Fisker vehicles that will be delivered before the end of this year. 

Rear view of Fisker Ocean SUV with dog looking out back window.

Image source: Fisker.

Now what

Fisker also reiterated its plan to produce about 42,000 vehicles in 2023. It said it had reservations for 62,000 of its electric SUV as of Oct. 31. But the stock initially plunged this morning after RBC analyst Joseph Spak cut his rating from buy to hold and took his price target to $8 from $13 a share.

Barron's shared that the analyst said he wanted to wait for production to begin, since there is still execution risk. Spak also noted that other electric vehicle makers may have an advantage over Fisker due to the domestic production requirements in the Inflation Reduction Act. While the Ocean will be made in Europe, Fisker expects to have its second vehicle model produced in the U.S.

Fisker also mentioned that a prototype of that second model, the smaller and less expensive PEAR utility vehicle, will be ready ahead of schedule later this month. Fisker ended the quarter with more than $800 million on its balance sheet. But the direction of the stock from here will likely be determined from whether the company remains on track for its production goals. Investors will know much more when the next quarterly report is released.