EV stocks continue to sink

@silvernort i am considering it… but there is that niggling concern that it will continue to slide and never recover if the Ocean eats a shizit sammich..

Stock advice is hard. Of course you should really be ready and willing to say goodbye to your whole investment with any speculative startup like Fisker. 

The biggest issue is not just the product. Keep in mind that the Ocean could be an incredible smash hit, and Fisker could still lose money on each one sold. Their costs are going up as they open up lounges, deal with service and recalls (it will absolutely happen), and deal with the very expensive logistics of running a car biz. Fisker is in real trouble, and it has very little to do with the Ocean as a great product. The asset light model they decided to go with have massive weaknesses in profit margin controls. It accelerates production bottlenecks (so far not the case obviously), but it weakens profitability significantly.

Fisker is in a real bind here and the company is in serious trouble. Its not really something to shrug at honestly. Again, the Ocean could be an incredible class leading, best vehicle the World has ever seen, and Fisker could still go under rapidly.

@grimtango 

I really dislike posts like this.

Nowhere is there any evidence that "Fisker is in serious trouble". They're partnered with Magna-Steyr, Foxconn and now chargepoint and are on schedule to do everything as stated

Putting comments like this out in the ether do nothing other than stir up investor fear on some rando internet nonsense.

Do any of us believe that Magna-Steyr invested billions in order to build this vehicle to see it fail?

Where is the logic in that?

Fisker is on track for an amazing 2023. The stock price currently is completely disconnected from the reality of what is going on with production.

Posted by: @bmiddaugh

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@grimtango 

I really dislike posts like this.

Nowhere is there any evidence that "Fisker is in serious trouble". They're partnered with Magna-Steyr, Foxconn and now chargepoint and are on schedule to do everything as stated

Putting comments like this out in the ether do nothing other than stir up investor fear on some rando internet nonsense.

Do any of us believe that Magna-Steyr invested billions in order to build this vehicle to see it fail?

Where is the logic in that?

Fisker is on track for an amazing 2023. The stock price currently is completely disconnected from the reality of what is going on with production.

 

This right here is the problem. Magna is not partnered with Fisker! Foxconn is not partnered with Fisker! Chargepoint is not Partnered with Fisker! They don't share resources, revenue, costs, etc. I have no idea why people feel this is the case. Fisker has hired Magna, as a vehicle manufacturer, to make their cars for them. Fisker is a customer of Magnas. You are really doing yourself and everyone else who blindly follows what you are saying a disservice. Magna is a business that builds cars for anyone who wants it. Its a service and product offering of theirs. Fisker, has paid Magna, partly in Shares, as a down payment for the work needed to get the line and production going. It was part of the negotiation for Magna to take Fisker on as a customer. Not the other way around. 

Fisker is absolutely in trouble. They are losing money Q over Q, and are tracking towards bankruptcy until that changes. Fisker will not be profitable as soon as they start delivering cars. Thats not how it works. They have to sell enough cars to make money. What is that #? Fisker will struggle to survive even basic delays or recalls (very expensive). Low stock prices start to create compounding issues in their ability to raise funds (which they desperately need to do). The COGS is not the only costs Fisker has to pay for here. They have the raw cost of the car (most of which Magna will take their cut, as a business, because Fisker is a customer, not a partner), then Fisker has to pay all their employees, pay their rent on their facilities, advertising, support recalls. I get it that you believe what you want, and you can do your own research and of course come to your own conclusions, but Fisker doesn't even have assets like most car makers have that struggle. Other car makers that make their own cars own their factory, the equipment, etc. and that is a big part of a stocks value because those things have value. Fisker does not have that.

It seriously worries me how many good people here just don't get it. They don't see Fisker and the serious risks that they face with being successful. Delivering cars, even thousands of them, 10s of thousands does not mean they will make $! Its why they desperately need to sell as many Extremes as possible. Costs are going up (Magna has made it clear). Fisker is burning cash, and how long can they continue to raise money for the years and years it will take to make their first $1 in profit? I really do hope people betting the farm on Fisker seriously understand finance enough to understand the risk to reward ratio here. Lots of good people who love the Ocean may lose an awful lot investing in the business that is not = to the car they love. It almost killed Tesla, Lucid is in serious trouble and they make a gorgeous car, Rivian is in serious trouble and they make a killer truck. I seriously hope everyone here with shares gets rich from it. That would be awesome! However, most here invested in Fisker because they love the Ocean, and they believe that the success of the Ocean (of which they are absolutely convinced its a success, and it may very well be) is the success of Fisker. To be very blunt, its not. If Fisker does not make enough money from their cars, scale enough, sell enough in a short amount of time, they run out of $. Then they either dilute shares through offerings to get more to keep going, they get bought out, or they fold. Perhaps Magana would buy out Fisker if the car is successful, and Magna believes they can roll the brand into their own. However, Fisker on its own is not doing good.

I really don't know where people get this idea that Fisker is killing it or doing well. What makes you believe that Fisker as a business, as an investment, is doing well? Again, the Ocean is not Fisker. The Ocean with all its glory, and possible success does not mean the Fisker will make any profit from it. Its a huge reason why Tesla was a freaking miracle and should have died, but didn't. Its also why there has been 0 new car companies that survived in the last 100 years or so. Minus Tesla! This is not a low risk, high reward investment.

Seriously, if you disagree and have legit details as to your value and company analysis. Please share with me!

If you all have info and details that show me how I am wrong I would absolutely love to hear and see it! I want to get rich too ya know, and I am always on the hunt for good investments that show signs of being just that.

You're correct.

Fisker will be bankrupt within the year.

I can see that by following YOUR detailed analysis of their current financial situation.

Oh wait...

I only see hyperbole.

No one here knows what will happen in the next year as they ramp production. Their business model is completely different than tesla, lucid, rivian.

Everyone should stop with the hyperbole it's tiresome.

But ok, bankruptcy, I guess we'll see.

@grimtango  while i agree with you for the most part,Magna Steyer owns a percentage of Fisker, a fairly decent size chunk, so technically they ARE partnered with them. This is the main reason I am still “bullish” on Fisker as i find it hard to believe an established auto maker and innovative company like that would put themselves in a position to fail or take a huge loss.

Posted by: @seaphil

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@grimtango  while i agree with you for the most part,Magna Steyer owns a percentage of Fisker, a fairly decent size chunk, so technically they ARE partnered with them. This is the main reason I am still “bullish” on Fisker as i find it hard to believe an established auto maker and innovative company like that would put themselves in a position to fail or take a huge loss.

Im sorry, I disagree. Magna holds Fisker shares. As a part of the payment for Ocean production costs, because at the time it was advantageous to offer shares for partial payment vs all cash for Fisker. When this was done, at the height of the SPAC bubble, it was a solid deal and many companies were accepting shares as payment for services. Owning shares does not make you a partner. How can you explain owning company shares as being a partnership? Would I be a partner if I owned 1 share of Fisker? Company shares never have meant anything more than a tradeable, voteable, position/ownership of a company. A partnership is much more than that. Magna sees Fisker as a large customer who has backed their purchase for goods and services partially with shares. That is rather common for companies that do not have any revenue or cash flow.

We have no idea the stipulation on the contract for goods and services between Magna and Fisker. Very likely is significant Fisker resources tied up in their agreement (remember that short seller article? There is always some truth in those hit pieces), with who knows what stipulations around it should Fisker shares drop beyond a certain point. Perhaps we just have very different definitions of what a partnership is. Either way, partnership your way (they have shares therefore partners) or my perspective (Magna was paid in shares as part of their sales deal for Magna to agree to build the Ocean for Fisker) it doesn't change the business outlook for Fisker on the financials. Unless Magna is directly infusing cash into the company to keep them going, as if they were a subsidiary I don't see that as a partnership. Unless Magna directly owns and has rights to the platform Fisker claims is wholly their own and Magna is involved with Fisker beyond selling them their services that are available to anyone who wants it. I don't see that as a partnership.

If that is where the idea that Fisker is a success as a business, Magna owning shares. I am not sure how that changes the outlook on the financials. As either Magna would need to infuse Fisker with $ to keep them going (essentially buy them out), or they are simply a share holder like any of us possibly locked up contractually preventing an exit. We simply don't know. Magna buying Fisker outright would actually be a good thing. That would mean Fisker would become an official brand of Magna's complete vehicle business. However, I have not seen any language that suggests that might happen, and it could threaten their existing complete vehicle business as it would create a conflict of interest among what Magna does.

Personally, I certainly wouldn't invest on just the knowledge that Magna was paid in shares for a service on its own. Obviously Magna and Fisker cannot be that great of partners if Fisker is already looking to hire Foxconn (a competitor) to do the PEAR. It just tells me that Fisker is a customer of Magna's, and Magna made a deal for a portion of the contract to be paid by shares since Fisker was and is cash strapped. I am not sure how/why Magna would agree to Foxconn coming in and building the PEAR (the real mass market vehicle) if they were truly partners in the way many seem to believe they are.

Posted by: @bmiddaugh

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You're correct.

Fisker will be bankrupt within the year.

I can see that by following YOUR detailed analysis of their current financial situation.

Oh wait...

I only see hyperbole.

No one here knows what will happen in the next year as they ramp production. Their business model is completely different than tesla, lucid, rivian.

Everyone should stop with the hyperbole it's tiresome.

But ok, bankruptcy, I guess we'll see.

I am asking for evidence or information to the contrary. We all see their quarterly releases. We all know their cash on hand and the cash out the door. We absolutely do not know the profitability per car of the Ocean for Fisker. How much profit does the Sport, Ultra, Extreme bring in? We are only able to guess here until we actually see some stats. I am absolutely making assumptions on the true profitability of the Ocean vs others and I lean towards less profit per car because Fisker isn't making them. The benefits of asset light are in ease in costs of establishing a new factory from the start. That has been a large challenge for all new car makers and what really helped kill Fisker 1.0. Magna making the cars and taking their own cut of the profit will mean less profit ratio to COGS at the manufacturing level. Magna will be getting their cut, and then Fisker will get theirs. I assume that the Extreme does have healthy profit margins baked in (mainly because it is massively more expensive than the base version more that $31,000) The Extreme will not have a significant increase of COGS between the Sport and the Extreme and likely holds great profit margins between them. Can practically get 2 Sports for the price of 1 extreme, which is extreme.

Fisker needs to sell lots of Extremes and few Sports and Ultras. They have to fund the rest of the business and everything else off the profit being made here. And they need to be making and selling enough to pay for the current expenses and future expenses of the business as they grow. Which is a variable cost model, not fixed.

Again, please share if you have insights beyond gut feelings. Because I see Fisker as a wholly gut feeling gamble because there are so many unknowns and so many risks facing success. No other EV maker (besides Tesla) is making a profit on their EV business right now. Not one. If Fisker can ramp, and sell enough cars to break that magic making a profit # they will rocket in value, of course. But what is that number, and can Fisker hit that # before they run out of cash? We know that timer is ticking. Not seeing cars delivered yet this year is not a good start to the year. No if's and's or but's about that. 

@grimtango I guess you can interpret partnerships however you want.  If I had close to 10% ownership in a company, I would care what happens to that company but your threshold may differ.

As far as defining partnership, here is some language from their Manufacturing Agreement. 

Article 6 - "The Parties acknowledge that, in order to successfully undertake the work which is the subject of this Agreement, they will need to work together in good faith and in the spirit of cooperation."

Article 8 - "The Parties will establish a steering committee as the top management body for the Parties’ cooperation on all relevant matters related to the Services and the manufacture of the Vehicle (“Steering Committee”). The Steering Committee has the authority to make decisions on the major issues and aspects relating to the manufacture of the Vehicle. The Steering Committee shall be comprised of three members appointed by Fisker from time to time and three members appointed by Magna from time to time."

Article 12 - "The Parties shall work together in a partnership-like manner; each Party relies and is dependent upon the other Party’s due performance of its obligations hereunder."

I suppose "a partnership-like manner" is not a partnership but much of the language in the agreement is akin to a partnership in my view.

https://www.sec.gov/Archives/edgar/data/1720990/000119312521192732/d175606dex101.htm

I get that having a real conversation here is stressful. Stock at all time lows and junk. Its not fun. Rest assured, if Fisker makes it and is a success share holders will absolutely be handsomely rewarded for it (risk/reward). I have not really talked to anyone about FSR stock that actually knows and is interested in the business side of things. Its always "I love the Ocean I own stock! *Rocket emoji*". The Magna partnership point is not something I personally see as a benefit, possibly the opposite honestly.

Either way, Fisker is a risky startup stock play! Its not a COKE or VZ. Its not a well established money printer that is making money and succeeding already. They are a startup, in arguably the worst industry in the World. Anyone who bets the farm on it should know! Shouldn't they?

Posted by: @ttrinchi

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@grimtango I guess you can interpret partnerships however you want.  If I had close to 10% ownership in a company, I would care what happens to that company but your threshold may differ.

As far as defining partnership, here is some language from their Manufacturing Agreement. 

Article 6 - "The Parties acknowledge that, in order to successfully undertake the work which is the subject of this Agreement, they will need to work together in good faith and in the spirit of cooperation."

Article 8 - "The Parties will establish a steering committee as the top management body for the Parties’ cooperation on all relevant matters related to the Services and the manufacture of the Vehicle (“Steering Committee”). The Steering Committee has the authority to make decisions on the major issues and aspects relating to the manufacture of the Vehicle. The Steering Committee shall be comprised of three members appointed by Fisker from time to time and three members appointed by Magna from time to time."

Article 12 - "The Parties shall work together in a partnership-like manner; each Party relies and is dependent upon the other Party’s due performance of its obligations hereunder."

I suppose "a partnership-like manner" is not a partnership but much of the language in the agreement is akin to a partnership in my view.

https://www.sec.gov/Archives/edgar/data/1720990/000119312521192732/d175606dex101.htm

 

Thats fine if you see that as partnership. I see that as "We agree to fulfil our ends of this sales deal to the best of our ability" and "Hold the right to have members of both companies oversee the production and completion of this sales and manufacturing contract, and to hold each other to our ends of the deal"

What are the obligations of Magna in this agreement?

- produce the Ocean and deliver a product that meets quality expectations and production volumes agreed upon in the manufacturing contract

What are the obligations of Fisker in the agreement?

- To pay for the vehicles at the agreed upon price (possibly variable?) and the agreed upon volume of the manufacturing contract

If you look at this as a sales contract (yes, a sizeable one) this language seems pretty common place. Agreeing to meet the agreed upon terms of the agreement. We have an obvious difference in definition and relationship between Magna and Fisker which is fine. However, my perspective being different than many others here paints a different picture to me. I also cannot explain the Foxconn "partnership" if Fisker and Magna are truly partners outside of this manufacturing agreement, how does Foxconn slide in to this relationship?

Posted by: @ttrinchi

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@grimtango I guess you can interpret partnerships however you want.  If I had close to 10% ownership in a company, I would care what happens to that company but your threshold may differ.

As far as defining partnership, here is some language from their Manufacturing Agreement. 

Article 6 - "The Parties acknowledge that, in order to successfully undertake the work which is the subject of this Agreement, they will need to work together in good faith and in the spirit of cooperation."

Article 8 - "The Parties will establish a steering committee as the top management body for the Parties’ cooperation on all relevant matters related to the Services and the manufacture of the Vehicle (“Steering Committee”). The Steering Committee has the authority to make decisions on the major issues and aspects relating to the manufacture of the Vehicle. The Steering Committee shall be comprised of three members appointed by Fisker from time to time and three members appointed by Magna from time to time."

Article 12 - "The Parties shall work together in a partnership-like manner; each Party relies and is dependent upon the other Party’s due performance of its obligations hereunder."

I suppose "a partnership-like manner" is not a partnership but much of the language in the agreement is akin to a partnership in my view.

https://www.sec.gov/Archives/edgar/data/1720990/000119312521192732/d175606dex101.htm

 

Article 4 is key to my point of view

Article 4

This Agreement stipulates the terms and conditions under which Magna manufactures and delivers Vehicles to, and provides related services for, Fisker. This Agreement supersedes the initial contract manufacturing agreement dated December 16, 2020 (“Initial CMA”), and upon execution of this Agreement, the Initial CMA shall be of no force and effect.

complete Article 6 is in relation to the "SOP" and "SORP"

Article 6

The Parties acknowledge that, in order to successfully undertake the work which is the subject of this Agreement, they will need to work together in good faith and in the spirit of cooperation. In order to have a successful SOP and SORP and deliver Vehicles in the required numbers and quality, each Party shall perform its obligations in due time, in accordance with Best Industry Practice, and also otherwise in accordance with the terms of this Agreement.

Best to read the complete articles you posted snippets of. They very much detail a sales and manufacturing contract and agreement. It does not read like a partnership the way I see a partnership. Again, if we are debating what is and is not a partnership, and what value it adds to a stock or companies value. We will absolutely disagree then. I don't see anything in this SEC declaration suggesting Magna and Fisker are anything more than supplier (Magna) and buyer (Fisker) much like you would find in a supplier agreement for any other auto maker/supplier.

@grimtango I think you are confusing partnership with a joint venture.