What happened
Fisker (FSRN) stock hit a wall this week that sent it plunging after a recent run. Shares had soared by more than 25% in a three-week period before reversing course this week. Since last Friday's close, Fisker stock has retreated by about 13% as of late Thursday afternoon, according to data provided by S&P Global Market Intelligence.
So what
The sharp gains for Fisker stock in recent weeks came after the company officially introduced its next upcoming vehicle models at a mobility show in Munich. The PEAR electric car designed for urban environments, Alaska electric pickup truck, and Rōnin four-door convertible sportscar are expected to part of Fisker's lineup by the end of 2026.
Perhaps more importantly, the company separately announced plans to accelerate deliveries of its first offering -- the Ocean luxury electric SUV -- in the United States as it expects to ramp up the production rate from 180 vehicles per day to about 300 in the fourth quarter. Fisker uses automotive contracting manufacturer Magna International for assembly of its vehicles.
But the stock sold off this week after that news helped it jump by 25%.
Now what
The sell-off is partly due to more macroeconomic issues. The Federal Reserve didn't raise interest rates further this week, but it did signal that there could be another rate increase before the end of the year. That caused several high-growth electric vehicle stocks to drop. Shares of Tesla and Rivian Automotive joined Fisker in this week's decline.
There's a reason this drop might be enticing for believers in Fisker and its contractor business model, though.
As of the end of August, a whopping 43% of Fisker's share float was sold short, according to MarketWatch. That could lead to a sharp short squeeze if Fisker's vehicle ramp and expanded deliveries are successful. A potential short squeeze isn't a reason to own a stock. But if one sees Fisker's execution going well, this week's drop could pay off down the road. The key question is how successful its sales growth and vehicle adoption will be.