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Why Fisker Stock Continued to Plunge Today

In Business
January 09, 2024

Fisker (NYSE: FSR) has had a rough start to the year. Shares have plummeted more than 30% over the last five days. That trend continued today, with the stock down by 11.3% as of 12:55 p.m. ET.

Last week, the electric vehicle (EV) maker announced a major change in its sales strategy to jump-start sales of its electric Ocean SUV and shave down unexpectedly high delivery costs. The Ocean is manufactured by contract partner Magna International at a factory in Austria. That strategic change seemed to rattle investor confidence in the EV start-up.

News from the company and beyond

Today, the company announced the appointment of a chief accounting officer, its second accounting personnel change in less than three months. That came after it previously had to delay its 2023 third-quarter financial results due to the timing of the prior chief accounting officer’s departure. But that might not be all the factors that explain today’s drop in the stock.

Anecdotal reviews on social media should be taken with a grain of salt. Nevertheless, there are stories on Reddit from new Fisker Ocean EV owners experiencing what they claim are unexplained losses in the battery charge as the vehicle sits parked. The company has engaged reviewers, and there is no reason to think there is a fundamental problem at this point. But there’s no denying that social media drives retail investors’ thinking these days.

Hopes from a new sales strategy

More impactful for the business is the company’s recent decision to alter its direct-to-consumer sales approach and instead sell its vehicles through dealerships in North America. The company will add dealerships in Europe as well, but will also continue to offer direct sales there.

The company has experienced logistical difficulties in getting the Ocean to customers in North America due to vehicle production being in Europe. It hopes the dealership model will help resolve its delivery struggles — especially with the company saying that test drives by potential customers have resulted in stronger sales results.

Investors are selling the stock through these growing pains for now. Those who see the company navigating through it with its highly acclaimed EV might find the recent decline in the stock as a reason to risk some speculative money.

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Howard Smith has positions in Magna International. The Motley Fool recommends Magna International. The Motley Fool has a disclosure policy.

Why Fisker Stock Continued to Plunge Today was originally published by The Motley Fool

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