Investors were slamming the brakes on Fisker (FSR +0.00%) stock today. Shares of the electric vehicle (EV) start-up were tumbling after the company issued the dreaded "going concern" warning in a filing after hours yesterday. Essentially, that means the company is running out of cash and may not be able to stay in business.
Fisker also reported preliminary fourth-quarter earnings and said it was in advanced talks to take an investment from a major automaker, which was later reported to be Nissan.
As a result, the stock closed off 33.8% after trading down as much as 47.9% earlier in the session. The stock recouped some of its losses in late afternoon trading after Reuters reported that Nissan was the interested automaker.
Image source: Fisker.
Fisker backs up into a corner
Fisker only started selling its EVs in the third quarter of last year, so the company has only just begun bringing in meaningful revenue.
The company finished 2023 with cash, cash equivalents, and restricted cash of $395.9 million. It also said it had $530 million in inventory, including both finished vehicles and raw materials.
It said it expected capital expenditures and working-capital requirements to decrease in 2024, but it will likely need new debt or equity financing to "satisfy its requirements" over the next 12 months. It added, "The company expects to conclude there is substantial doubt about its ability to continue as a going concern" when it files its annual financial statements.
It also plans to cut its workforce by 15%, related in part to its change to selling through a dealer network, and it said it was in discussion with one of its debtholders about making an investment in the company.
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Key Data Points
Can Fisker survive?
Fisker's problems aren't taking place in a vacuum. Much of the EV industry is struggling as start-ups like Lucid and Rivian are posting wide losses, and more mature EV makers like Tesla are cutting prices, slowing production growth, and seeing profits fall.
In that environment, it seems difficult for Fisker to quickly become profitable even if everything goes right for it. A relationship with Nissan could help the company stay afloat and potentially mount a comeback, but at this point, the odds facing Fisker seem long.
The EV stock is best avoided.
