Why Fisker Shares Are Soaring 30% This Week, and Could Go Higher

What happened

Electric vehicle (EV) start-up Fisker (NYSE: FSR) delivered better-than-expected financial numbers in its fourth-quarter and full-year report on Monday -- but that isn't really why the stock has been surging this week. As of early Friday morning, Fisker shares were up by more than 30% since last Friday's close, according to data provided by S&P Global Market Intelligence.

So what

Fisker stock has been soaring this week not based on its past results, but because of what management said about the future. The company told investors it spent less money than expected in 2022, but still plans to make the first deliveries of its electric Ocean SUV this spring. Moreover, it projects that it will produce more than 42,000 units in 2023 as the number of reservations for the vehicle continues to grow. Investors liked that forecast, particularly when comparing it to what they have been hearing from other upstart EV makers that have already had their debut models in production for a full year.

Fisker Ocean SUV front view.

Image source: Fisker.

Now what

Two notable examples of EV makers that offered less-impressive outlooks are Rivian Automotive and Lucid Group. Rivian plans to double its production volume in 2023 to 50,000 units, while Lucid plans to build up to 14,000 luxury electric sedans this year. Perhaps more importantly, Lucid says it's seeing a decline in its number of reservations. Context like that gives EV investors more reason to be impressed by what Fisker had to say this week.

In Fisker'searnings conference callfor investors, CEO Henrik Fisker said, "Our reservations continue to increase despite new competition and competitors' price reductions." That is likely the result of Ocean SUV having a starting price of under $38,000 for its base trim version. Fisker also plans to debut its next electric car model with a base price of under $30,000.

Fisker's business model is different than that of many of its competitors. It is using a contract manufacturer to help keep its capital costs down. It only expects capital expenditures of about $250 million in 2023 and told investors it expects positive gross margins and potentially positive earnings before interest, taxes, depreciation, and amortization (EBITDA) as well this year. That is attracting some investors who may be losing patience with other EV start-ups' mounting losses and waning consumer appeal.

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Howard Smith has positions in Lucid Group. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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