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Shares of Fisker Inc. extended their losses below $1 after the electric-vehicle maker lost its most bullish analyst, who cited the company’s continued accumulation of “unanticipated growing pains” for his loss of faith.
“While we still believe Fisker has the potential to be a player in the EV market, the inconsistency of delivery cadence, shift in distribution strategy and now an investigation into the Ocean’s braking performance, give us pause in recommending the stock,” TD Cowen analyst Jeffrey Osborne wrote in a note to clients Wednesday.
Osborne cut his rating on the stock to market perform, after it had been at outperform for at least the past three years. His price target swung to $1, which is now the lowest of the 13 analysts surveyed by FactSet who cover Fisker, from $11 previously, which had been the highest.
Fisker shares
FSR,
tumbled 7.4% toward a record low in afternoon trading. It had closed below $1 for the first time on Tuesday, amid reports that the National Highway Traffic Safety Administration was looking into the Fisker Ocean for safety issues related to braking performance.
“[W]e admit we missed the mark on the timing of Fisker reaching its potential and tried to maintain our faith, in what we still see as a promising product, for too long,” Osborne wrote.
The California-based company said it had no comment at this time on the reports of the NHTSA’s probe.
Osborne said that while regulatory probes are “relatively common” for auto manufacturers and usually have little financial impact, the NHTSA’s probe could “thicken the scar tissue on investor sentiment” by resulting in “material delays” for a company with a “sporadic” delivery-to-production ratio.
The shift in distribution strategy Osborne mentioned refers to the company’s announcement earlier this month that it was abandoning the direct-sales model, in favor of a new dealer-partnership business model.
Osborne believes this shift will not only put pressure on margins, but will also require “incremental state regulatory approvals.” And coupled with “mixed” vehicle reviews and an NHTSA probe, he believes the delivery delays the company has experienced will be exacerbated over the next year.
Fisker said in an email to MarketWatch that it was already in advanced talks with unnamed, “big-name” dealer groups regarding partnerships, and that the National Automobile Dealers Association “has expressed excitement” at its shift in strategy.
The stock has now plummeted 85.4% over the past three months, while the Global X Autonomous & Electric Vehicles ETF
DRIV
has slipped 3.4% and the S&P 500 index
SPX
has gained 8% in that time.
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