Why Fisker Inc. will MOON
By: Peter Lee
Tags: Ev, Tesla, Stocks, Fisker, Electric Car

When I think Fisker, I think about that ugly chromed out Justin Bieber car that we don’t see around anymore. That’s because that car was actually pretty terrible and the company went bankrupt and was sold off to a Chinese company for parts. In 2012, a lot of people were rooting for the EV space, with the federal government loaning hundreds of billions of dollars into clean energy companies. Tesla was one company that came out of that initiative as a a giant success. As EV stock prices reach all time highs, Fisker went public in late October 2020 with stock prices surging and teetering and surging again and teetering.

Enough of the introduction, here’s why Fisker will win. The first two reasons are boring generic reasons that anyone will know. #3 and #4 are more dense.

Sales will be high in 2022. Current earnings are based on Pre-Orders of the Fisker Ocean that will be released in 2022. So far, 9,000–10,000 pre-orders have been placed. With each car costing $37,499, that will bring the total revenue of the company to about 337,491,000, which is a little under 1/10 of the market cap. Electric car companies already trading for ratios much higher than that. Someone will say, well, you can’t base this on revenue, how about profit margin and income. Well, no one knows the true cost of the car, but by using Magna as the outsourced manufacturer, we can be sure that the price point of the Fisker Ocean makes sense. Otherwise, why would it the price be public? We’ve also seen updates the Magna and Fisker had met key timeline goals. I’d be concerned if price went up in 2021 for existing orders. Outsourcing car manufacturing? Is that even possible? Will that cut into their margins? If you don’t want to read any further, please read this: Magna manufactured Jaguar I-Pace, the luxury car company’s electric car with 292 mile range and won 62 awards with 11,000 vehicles sold. This means that Magna is fully capable of manufacturing 9,000 cars and more. It also means that Magna already passed the learning curve of refitting their existing production lines to accommodate electric cars. To me this is what car companies need to be doing. The slow and pain-staking process of building a manufacturing facility from the ground up is exactly what slowed Fisker Karma. Allowing specialized manufacturers to produce the cars and Fisker take on a design approach is a far better alternative. For a design company, they sure have a lot of cash. From this IPO, they raised $1 billion. That’ a lot of money in the bank. To sweeten the deal, their valuation is around $4 billion, meaning 1/4 of their assets is cash. That’s a better deal than Apple’s cash to market cap ratio.

Personal opinions coming up … I’m a founder of small coffee bar company. We used to make COBA’s by hand in a rented commercial kitchen, and we exhausted in the kitchen so much, that we didn’t have the capacity to move the company forward. None of us had traditional culinary backgrounds, only some internet knowledge of chocolate making. When we outsourced our most laborious tasks to a professional third-party manufacturer, all the creativity and push came back and we entered one of the most creative times of our company. The bars also came out better. Fisker is correct to remove the most time consuming, legal/license intensive task to professionals with a track record of providing quality EV vehicles.