Fisker: Watch What I Do, Not What I Say
In a possible (likely?) preview of the dilutive actions that many electric vehicle (EV) makers will have to make, on May 24 Fisker Inc. (NYSE: FSR) announced a US$350 million at-the-market stock issuance to fund its EV development program. At Fisker’s equity price at the time of announcement, this represents the eventual issuance of around 35 million shares, a 12% increase from current shares outstanding of approximately 297 million.
Note that Fisker felt the need to raise additional cash despite the following considerations:
- Its March 31, 2022 cash balance totaled US$1.04 billion, substantially higher than its projected cash burn over the last three quarters of 2022 of US$565-US$640 million. The company’s combined operating cash flow deficit and capital expenditures in 1Q 2022 totaled around US$150 million.
- In Fisker’s May 4, 2022 earnings release for 1Q 2022, the company said that its US$1+ billion of cash “at quarter-end was in line with expectations and is sufficient to fund the production launch of the Fisker Ocean [all-electric SUV] in November 2022.” In other words, cash from selling the Ocean is projected to start flowing into Fisker’s coffers in about six months. The company hopes to reach a monthly production rate of 5,000+ vehicles during 2023.
- Furthermore, on its May 4 1Q 2022 earnings conference call, Fisker’s CFO said the company is discussing with banks “non-dilutive asset-based borrowing facilities” to fund future initiatives.
- Fisker shares, like the stocks of many EV start-ups, are down dramatically from late 2021 levels. Fisker is down more than 55% from its US$23.75 mid-November 2021 peak.
| (in thousands of US $, except for shares outstanding) | March 31, 2022 | December 31, 2021 | September 30, 2021 | June 30, 2021 | March 31, 2021 |
| Operating Income | ($123,451) | ($133,448) | ($109,565) | ($53,140) | ($33,098) |
| Operating Cash Flow | ($105,988) | ($140,895) | ($103,450) | ($28,117) | ($28,810) |
| Cash – Period End | $1,042,562 | $1,202,439 | $1,400,411 | $962,366 | $985,422 |
| Debt, primarily Conv. Debt – Period End | $678,185 | $678,893 | $678,983 | $20,206 | $2,448 |
| Shares Outstanding (Millions) | 297.2 | 296.7 | 296.2 | 296.1 | 293.6 |
Despite all this, Fisker initiated a dilutive equity financing just 20 days after it released 1Q 2022 earnings. It follows that other EV OEMs like Rivian Automotive, Inc. (NASDAQ: RIVN) and Lucid Group, Inc. (NASDAQ: LCID), which likewise have substantial cash on their balance sheets but are operating at giant cash flow deficits and whose stocks are down significantly from their all-time highs, could opt to sell equity to ensure business continuity.
Reservations for the Ocean SUV reached more than 45,000 as of May 2, 2022, up from around 18,600 in early November 2021. Reservations cost US$250 and are refundable, net of a 10% restocking fee.
| Date | SUV Reservations | Comment |
| 2-May-22 | > 45,000 | Includes 1,600 fleet reservations |
| 14-Feb-22 | > 30,000 | Includes 1,600 fleet reservations |
| 2-Nov-21 | 18,600 | Includes 1,400 fleet reservations |
| 2-Aug-21 | ~17,500 | Includes 1,400 fleet reservations |
| 17-May-21 | 16,000 | |
| 25-Feb-21 | 12,467 | |
| October 2020 | ~2,500 |
Fisker’s cash burn rate has been fairly constant over the last three quarters, ranging from a high of US$193 million in 4Q 2021 to a low of US$119 million in 3Q 2021.
| (in thousands of US $) | March 31, 2022 | December 31, 2021 | September 30, 2021 | June 30, 2021 | March 31, 2021 |
| Net Cash Used in Operating Activities | ($105,988) | ($140,895) | ($103,450) | ($28,117) | ($28,810) |
| Capital Expenditures | ($45,750) | ($52,557) | ($15,838) | ($325) | ($65,665) |
| Total Cash Burn | ($151,738) | ($193,452) | ($119,288) | ($28,442) | ($94,475) |
Fisker has a number of positives: it appears the company will be able is to bring its flagship Ocean SUV to market later this year, and consumers and fleet buyers like it based on rising reservation statistics. On the other hand, Fisker has recorded negligible lifetime revenue, and the company is in the process of (gradually) selling a quantity of stock equivalent to 12% of its shares outstanding. Nevertheless, Fisker carries a robust US$3.1 billion stock market valuation.
Fisker Inc. last traded on the NYSE at US$9.71.
Information for this briefing was found via Edgar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
