Fisker (FSR) stock has a 43% short interest: here’s the contrarian case

By:
on Sep 27, 2023
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  • Fisker has a whopping 43% short interest as bets of its failure rise.
  • A case for the company can be made thanks to its asset-light business model.
  • It is also growing its daily vehicle production and has a good balance sheet.

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Fisker (NYSE: FSR) stock price has faced numerous headwinds in the past few months as concerns about electric vehicles (EV) rise. The shares were trading at $5.8 on Wednesday, down by more than 80% from the highest point on record. 

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Fisker business is doing well

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Fisker is an upcoming company in the automotive industry. Founded by Henrik Fisker, the company is building and selling four car brands: Ocean, PEAR, Alaska, and Ronin. After years of R&D, the company started manufacturing Fisker Ocean recently through its partnership with Magna International.

Unlike companies like Tesla and Rivian that research and manufacture their vehicles, Fisker uses an asset-light model that has been perfected by firms like Apple, Nvidia, and AMD. In a statement this week, the company said that its production was taking shape. It has now built 5,000 Fisker Ocean SUVs. 

It now hopes to increase this capacity by building 300 vehicles every day. If this happens, it means that the company will build over 109k vehicles in 2024, a strong number since it started manufacturing a few months ago. This target will be hindered by the Magna facility, which can only produce 70,000 units per year.

Fisker has a number of benefits. For one, its vehicles have a higher range than other vehicles. Its Fisker Ocean Extreme has an EPA range of 360 miles. In Europe, the same vehicle has a range of 707km. 

It has an asset-light with a strong balance sheet. It ended the last quarter with over $522 million in cash and restricted cash. It also has $33 million in VAT receivables. It spent just $88 million in the last quarter. This means that it has enough cash to last several more quarters.

Not everyone is convinced about Fisker’s story, especially after the company slashed its deliveries for the year. The company has a short interest of a whopping 43%, meaning that many investors expect the stock to retreat.

Fisker stock price forecast

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Fisker stock

FSR chart by TradingView

The daily chart shows that the Fisker share price has been in a strong bearish trend in the past few months. It has formed a descending channel shown in red. The stock is now between this channel and is along the 50-day and 25-day moving averages. It has also formed a small ascending channel that connects the lowest and highest swings since May.

The stock has also formed what looks like an inverted head and shoulders pattern. Therefore, the outlook for the stock is mildly bullish, with the next level to watch being the upper side of the ascending channel at $7. 

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