Fisker Stock Drops 43% on Possible Bankruptcy

Fisker (NYSE:FSR), an electric vehicle startup facing financial difficulties, has reportedly sought the assistance of restructuring advisers to explore the possibility of filing for bankruptcy, according to the Wall Street Journal. After the news emerged, Fisker's stock plummeted more than 43% intra-day today.

The company, which is in danger of running out of cash this year, has appointed FTI Consulting for financial consultancy and the law firm Davis Polk for legal advice regarding the potential bankruptcy proceedings.

Fisker's financial struggles were highlighted last month when it reported $273 million in sales for the prior year, while grappling with over $1 billion in debt.

Additionally, Fisker expressed significant concerns about its future, revealing doubts about its capacity to continue as a going concern. The company is currently in the process of seeking additional capital from investors and searching for a new manufacturing partner in the U.S.

Evercore revised its rating for Fisker (NYSE:FSR) from Outperform to In-Line and set a 12-month price target of $2.00 for the stock. This downgrade follows Fisker's announcement that it has lowered its production forecast from an initial range of 13,000 to 17,000 units to just 10,000 units.

The analysts at Evercore believe that 2024 will be a critical year for Fisker, requiring careful planning to navigate recent challenges. These challenges include risks to the brand's reputation, the necessity of raising additional funds, and the potential dilution of capital. In their note, Evercore ISI analysts expressed concerns about Fisker's execution capabilities and the absence of solid evidence of improved performance.

They described the upcoming year as a "highly precarious tightrope" involving execution challenges, brand risks, the need for capital raises, and the possibility of dilution.