On September 29, start-up electric vehicle maker Fisker Inc. (NYSE: FSR) announced that it had raised US$150 million of growth capital from an existing (unidentified) institutional investor.
The investor purchased US$170 million (principal amount) of zero coupon convertible notes due in 2025. Fisker received US$150 million in proceeds from the offering. Fisker did not disclose the stock conversion price reflected in the notes offering, so the potential shareholder dilution cannot be computed.
The same investor purchased US$340 million of Fisker convertible notes in a similar zero coupon convertible offering in July 2023. The company received proceeds of US$300 million from that transaction. These notes also mature in 2025 and reflect a Fisker stock conversion price of US$7.80 per share.
The upshot of all this: Fisker seems to have identified an investor who is quite willing to provide seemingly all the capital needed to bridge the electric vehicle maker to the point that it becomes a free cash flow generator. In this way, the deep-pocketed investor may in some ways be likened to the Saudi sovereign wealth fund which supports Lucid Group, Inc. (NASDAQ: LCID).
READ: Fisker Cuts Annual Production Guidance Again After Q2 Results
Fisker expects a total 2023 cash burn (defined as operating cash flow minus capital expenditures) of US$560 million to US$640 million, about US$350 million of which was already incurred in the first half of 2023.
Fisker Inc. – Quarterly Cash Burn Rate
| (in thousands of US $) | Full-Year 2023 Guidance | 30-Jun-23 | 31-Mar-23 | 31-Dec-22 | 30-Sep-22 |
| Net Cash Used in Operating Activities | $320,000-$380,000 | ($128,067) | ($83,742) | ($111,107) | ($85,962) |
| Capital Expenditures | $245,000-$260,000 | ($91,314) | ($45,748) | ($33,733) | ($57,345) |
| Total Cash Burn | $560,000-$640,000 | ($219,381) | ($129,490) | ($144,840) | ($143,307) |
The company had unrestricted cash of US$468 million as of June 30, 2023, so its cash balance pro forma for the two convertible offerings is around US$900 million.
Fisker’s cash flow could increase significantly before year-end 2023 if it can achieve its goal of delivering 300 of its flagship Ocean SUV vehicles per day sometime later in the year. As of September 26, 2023, Fisker had produced 5,000 of the vehicles and delivered 900 of them to U.S. and European customers.
It appears that Fisker has sufficient demand for its SUV to accommodate this 300 units per day delivery rate. As of early May 2023, about 65,000 customers had placed reservations for the vehicle. The company has not updated reservation data since that time.
Fisker produced 1,022 Ocean SUVs in 2Q 2023. Its daily production rate reached 140 units at the end of July, up from 80 at the end of June.
Fisker Inc. – Summary Financial Statistics
| (in thousands of US $, except for shares outstanding and number of vehicles produced) | Full-Year 2023 Forecast | Jul-23 | June 30, 2023 | March 31, 2023 | December 31, 2022 |
| Number of Vehicles Produced | 20,000 to 23,000 | 1,009 | 1,022 | ||
| Number of Vehicles Produced Per Day | Goal of 300 by late 2023 | 140 at end of July 2023 | 80 at end of June 2023 | ||
| Revenue | $825 | $198 | $306 | ||
| Gross Margin-Amount | $62 | $64 | $68 | ||
| Gross Margin, in Percentage Terms | 7.5% | 32.3% | 22.2% | ||
| Operating Income | ($87,918) | ($121,613) | ($178,134) | ||
| Operating Cash Flow | ($128,067) | ($83,742) | ($111,107) | ||
| Adjusted EBITDA | ($63,216) | ($114,150) | |||
| Cash – Period End | $467,549 | $652,534 | $736,549 | ||
| Debt, Primarily Convertible Debt – Period End | $713,589 | $702,160 | $695,791 | ||
| Shares Outstanding (Millions) | 335.9 | 320.1 | 314.9 |
Fisker could be an interesting speculation in the EV industry. Its financial stability has been significantly enhanced by its ability to raise significant investment capital from a large investor. In addition, the company’s cash flow could grow markedly within the next few months if it can achieve its delivery targets.
Fisker Inc. last traded on the NYSE at US$6.42.
Information for this briefing was found via Edgar and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
