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After Fisker (NYSE:FSR) filed its fourth-quarter earnings report at the end of February, its shares lost about half their value. In addition, the company delayed the release of its 10-K and warned of the risk that it will not survive in the near future. To save the day, Fisker is likely to seek a strategic partnership with a large traditional automaker as it is rapidly running out of funds. Although it has been a promising start-up in the field of electric vehicles for 2022 and 2023, demand for such vehicles is waning and the industry environment is becoming increasingly competitive, putting a strain on the company's production potential.
In the past, I have invested in Fisker shares, and as you will see at the end, I made an additional purchase that lowered the average price to 0.25.
The last quarter was not a good period for Fisker (Source). The electric vehicle manufacturer posted a loss in both the profit and sales lines, due to decreased liquidity and lower than expected demand for electric vehicles. The loss per share was much higher than expected, with a $0.22 differential from the average expert projection and lower than expected sales at $110.7 million.
With disappointing production in fiscal year 2023 and slowing demand for electric vehicles, Fisker is in a difficult situation. Management has admitted that the company may not be able to continue as a business unless it establishes a strategic partnership with OEMs. In addition, the company announced a new form of cooperation with dealers to simplify distribution and sales. The addition of 100 dealers (50 in the U.S./Canada and 50 in Europe) is expected to help achieve this goal.
With the Trading View feature, it is possible to analyze the opinions of all analysts on a company's stock. I agree with The last report I read and which you can find in the image, which rates Fisker 0.80 in a pessimistic scenario and 2 in the most optimistic scenario.
As I discussed in a previous article, my operation is high risk. There are several possible scenarios in the coming months, including a stock failure, which I already predicted. In this situation, a prudent investor should sell the stock. However, I decided to be more aggressive with this operation.
When a company goes bankrupt, its shares are blocked or transferred to the over-the-counter (OTC) market, where it is much more difficult to buy or sell.
When a company is in a dire financial situation with bankruptcy as its only option, there are two main choices: Chapter 7 bankruptcy or Chapter 11 bankruptcy.
Based on my experience, I rule out the worst case scenario: Chapter 7. With this, the stock disappears from the portfolio and you suffer a 100 percent loss. In this liquidation process, bondholders have at least a chance to recover something unlike those who own stock.
If a company is facing financial difficulties, Chapter 11 may be a good option. Unlike Chapter 7, this procedure allows the company to restructure and try to improve its financial situation. During the process, business operations continue while steps are taken to reduce expenses and renegotiate debts with creditors overseen by the court.
This could also lead to the dismissal of CEO Fisker, who has clearly failed in his marketing strategy. However, this could be a positive step to help the company recover and return to financial prosperity.
During a bankruptcy proceeding, actions generally remain stalled until the legal processes are completed. However, after about a year and a half, negotiations can resume. This could lead to the recovery of the value of the shares above $1 and their reintroduction to the market as the company will have reduced debts and regained its attractiveness to investors. It could also be an opportunity for the company to strike deals with other automotive companies, restructure and return to business.
We look forward to seeing you in the next article! And remember, for successful trading always rely on Tradingview: an indispensable tool that can help you avoid serious mistakes during your trades.
After Fisker (NYSE:FSR) filed its fourth-quarter earnings report at the end of February, its shares lost about half their value. In addition, the company delayed the release of its 10-K and warned of the risk that it will not survive in the near future. To save the day, Fisker is likely to seek a strategic partnership with a large traditional automaker as it is rapidly running out of funds. Although it has been a promising start-up in the field of electric vehicles for 2022 and 2023, demand for such vehicles is waning and the industry environment is becoming increasingly competitive, putting a strain on the company's production potential.
In the past, I have invested in Fisker shares, and as you will see at the end, I made an additional purchase that lowered the average price to 0.25.
The last quarter was not a good period for Fisker (Source). The electric vehicle manufacturer posted a loss in both the profit and sales lines, due to decreased liquidity and lower than expected demand for electric vehicles. The loss per share was much higher than expected, with a $0.22 differential from the average expert projection and lower than expected sales at $110.7 million.
With disappointing production in fiscal year 2023 and slowing demand for electric vehicles, Fisker is in a difficult situation. Management has admitted that the company may not be able to continue as a business unless it establishes a strategic partnership with OEMs. In addition, the company announced a new form of cooperation with dealers to simplify distribution and sales. The addition of 100 dealers (50 in the U.S./Canada and 50 in Europe) is expected to help achieve this goal.
With the Trading View feature, it is possible to analyze the opinions of all analysts on a company's stock. I agree with The last report I read and which you can find in the image, which rates Fisker 0.80 in a pessimistic scenario and 2 in the most optimistic scenario.
As I discussed in a previous article, my operation is high risk. There are several possible scenarios in the coming months, including a stock failure, which I already predicted. In this situation, a prudent investor should sell the stock. However, I decided to be more aggressive with this operation.
When a company goes bankrupt, its shares are blocked or transferred to the over-the-counter (OTC) market, where it is much more difficult to buy or sell.
When a company is in a dire financial situation with bankruptcy as its only option, there are two main choices: Chapter 7 bankruptcy or Chapter 11 bankruptcy.
Based on my experience, I rule out the worst case scenario: Chapter 7. With this, the stock disappears from the portfolio and you suffer a 100 percent loss. In this liquidation process, bondholders have at least a chance to recover something unlike those who own stock.
If a company is facing financial difficulties, Chapter 11 may be a good option. Unlike Chapter 7, this procedure allows the company to restructure and try to improve its financial situation. During the process, business operations continue while steps are taken to reduce expenses and renegotiate debts with creditors overseen by the court.
This could also lead to the dismissal of CEO Fisker, who has clearly failed in his marketing strategy. However, this could be a positive step to help the company recover and return to financial prosperity.
During a bankruptcy proceeding, actions generally remain stalled until the legal processes are completed. However, after about a year and a half, negotiations can resume. This could lead to the recovery of the value of the shares above $1 and their reintroduction to the market as the company will have reduced debts and regained its attractiveness to investors. It could also be an opportunity for the company to strike deals with other automotive companies, restructure and return to business.
We look forward to seeing you in the next article! And remember, for successful trading always rely on Tradingview: an indispensable tool that can help you avoid serious mistakes during your trades.