After an explosive Monday, Fisker (FSRN -12.70%) stock rose even higher Tuesday morning, surging 10.8% within minutes of the market's opening. After announcing a new agreement with an institutional investor yesterday that could free up some cash for the electric vehicle (EV) maker, Fisker is trying harder to reinstate investors' faith with an important business update today.
Fisker has reduced debt and expects to boost cash flows
Fisker started delivering its Ocean SUVs in mid-2023 but has struggled to scale up production and deliveries so far. Earlier this year, though, Fisker said it was implementing developing a new dealer-partnership model in North America to expand its reach and boost sales. So far, Fisker has primarily sold directly to consumers.
This morning, Fisker said it had received strong interest and was already in talks with more than 100 dealers across North America and Europe since announcing its new vehicle distribution strategy. Importantly, the EV maker expects its new distribution model to boost its cash flows.
Fisker says it expects to sell most of the EVs currently in its inventory before the first quarter ends, thanks to a wider dealership network. As of the end of 2023, Fisker carried an inventory of completed vehicles worth nearly $290 million, which means selling those vehicles should generate that much cash flow for the company. Fisker also has parts and batteries worth $260 million in its inventory, which it now expects to use in the production of its Ocean SUVs in 2024. Again, using those parts should free up cash for the company.
Fisker also tried to address other concerns today. It highlighted how its amended agreement with an institutional investor announced yesterday has not only reduced the company's debt by $185.5 million, but also gives it greater flexibility to pursue "strategic collaborations."
The company also responded to the ongoing probe of the Ocean SUV's braking system and stated that it had already responded to complaints, upgraded its braking system over the air, and that its Ocean SUV brake system meets U.S. and international standards.
Is Fisker stock a buy now?
Fisker stock skyrocketed 40.5% on Monday, which might explain why the EV stock had already given up some of its gains from this morning as of this writing -- it was trading just about 3% higher as of 10:45 a.m. ET Tuesday. The irony is that today's updates from the company are far more meaningful than yesterday's announcement, but the market appears to have already baked today's news into the stock price, at least to some extent, especially after Fisker stock crashed to an all-time low last week.
I highlighted yesterday how Fisker needs to boost sales and cash flows, and address the brake system probe to convince investors that it can turn things around. Today's updates from Fisker seem to be a step in that direction. All investors want now is for these updates to reflect in Fisker's numbers in the form of higher revenue and cash flows, and that's when this EV stock could start to show some promise.
