Three straight days of share price declines reversed for Fisker (FSRN -12.70%) on Friday, after the electric car start-up announced it will be attending the National Automobile Dealers Association (NADA) Show in Las Vegas next week, and will there "share its plans" for setting up a car dealer network.
Fisker shares rose 8.5% through noon ET in response to the news.
What's Fisker up to now?
Earlier this month, Fisker announced that it plans to shift from a Tesla-like direct sales model and instead develop a dealer network (of some sort) of its own.
Today's announcement doesn't add a whole lot of color to those plans. Fisker reiterated that "over 100 dealers in North America and Europe" have expressed interest in partnering with Fisker, and that it hopes building such a network will help it to "significantly scale [its deliveries of] Fisker Ocean" electric SUVs. Fisker also insisted that despite adding the complications of a dealership model, it will continue to benefit from an "asset light business model." Further details will probably have to wait until next week, when Fisker CEO Henrik Fisker will sit down with NADA's public affairs VP Jonathan Collegio for a livestreamed interview.
Management did add, however, that it thinks adding dealerships to the mix will somehow "generate more cash" for the company.
Is Fisker stock a buy?
That could be good news for investors. Although Fisker is hoping to jump its 2023 sales numbers significantly -- to $320 million or more -- when it reports earnings next month, the company is still burning cash at a rather alarming rate. According to the latest data from S&P Global Market Intelligence, cash burn at Fisker exceeded $830 million over the last 12 reported months, and the rate of cash burn has increased in every year the company has been in business.
Analysts who follow Fisker are hoping that with sales now ramping higher, this cash bonfire will begin to tamp down this year, and forecast cash from operations, at least, will turn positive at roughly $47 million in 2024. Capital spending will still exceed that number, however, and positive free cash flow and positive earnings aren't forecast to arrive before 2027 at the earliest.
With cash reserves below $1.2 billion already, it's still a race against the clock to see if Fisker can become self-sufficient before it runs out of cash.
