Fisker stock price ascending triangle points to a short squeeze

Fisker (NYSE: FSR) stock price has held quite well in the past few months even as short interest in the ecosystem surged to 44%. The shares were trading at $6.20 on Friday, inside the range it has been since April. 

EV challenges remain

Fisker Automotive stock has reacted mildly to three important news events this week. First, the company completed raising money through a senior unsecured convertible offering. It raised $170 million as it sought to boost its balance sheet.

Fisker, like other unprofitable companies in the EV industry, has been burning its cash fast. Its total cash and short-term investments dropped to $470 million in Q2 from $857 million in the same quarter in 2022.

This cash burn is understandable since the company was doing research on its vehicles. It started manufacturing a few months ago and has already delivered 900 Fisker Ocean to its customers. The firm hopes to ramp up production in Q4 and in 2024.

Second, Rivian raised capital this week as it also sought to boost its balance sheet. This capital raise was a major red flag for other upstart EV companies like Fisker and Lucid Motors. It means that these companies will continue burning cash even after starting vehicle production.

Third, Tesla continued its price cuts signaling that the EV industry is slowing. The company slashed price by between 2.7% and 4.2%. Model 3 will now retail at $38,990 while Model Y long-range will sell for $48,490.

Therefore, other companies like Fisker could also be forced to slash their prices to attract more customers. If this happens, we could see Fisker’s gross margins slip in the next few quarters.

Many investors believe that Fisker stock price has more downside going forward. It has a 44% short interest, making it one of the most shorted companies in the industry.

Fisker stock price forecast

The daily chart shows that the Fisker share price has remained in a tight range for a while. It has remained below the important resistance level at 7.10p, the highest swing on September 15, July 13, and May 25th. The stock has also formed an ascending triangle pattern, which is a bullish sign. 

Fisker is also trading at the 50-day moving average. Therefore, I suspect that the shares will remain in this range in October. It will then bounce back possibly on November 2nd when it publishes its earnings. The stock could also go through a short squeeze because of its high short interest.