Investor Confidence Boost: Fisker's Funding Success Sets Stock Price Soaring

The stock dilution due to convertible notes will not take place until the stock price is higher.  It's always better to have more cash runway than not - even at the expense of possible future dilution.

Posted by: @mtn-ranger

↑

The stock dilution due to convertible notes will not take place until the stock price is higher. 

Yes, $7.80/share according to the press release.

Posted by: @seancallahan

↑

Seems like all the early write ups mention Fisker shares falling on the announcement

I gotta wonder about the financial press and this company.

Articles EVERYWHERE about how the stock fell with that announcement not ONE that talks about the massive turn around and confidence once people who UNDERSTOOD what it meant took notice.

I mean, I know, I know, all those photos and videos of thousands of Oceans being produced are just elaborate lucasfilm level CGI renderings in order to bilk millions out of investors.

How could I have not seen this?!

"heavy eye roll"

Posted by: @bmiddaugh

↑

I gotta wonder about the financial press and this company.

Articles EVERYWHERE about how the stock fell with that announcement not ONE that talks about the massive turn around and confidence once people who UNDERSTOOD what it meant took notice.

I understand your perspective! It's often easier to write an article with the benefit of hindsight. 😊 

It is very good that the stock is moving in a positive direction, but no matter how you slice it this is a brutal round. The round is debt (so much lower risk and interest bearing) with an exercise right at 15% below the IPO price from three years ago. That sort of down round is really tough for all of the original investors. 

The conversion price is $7.80, however, the price is already below if they did an ATM offering.  Fisker received $300mm for the $340mm offering.  At $7.80/share, the $340mm is 43,590k shares.  Those shares are equal to $6.88/share based on the $300mm they received.  $6.88 is 15% higher than the close Friday (and likely would not have crossed $7.00 if not for the announcement), but they could have diluted less shares with a new ATM.

Please let me know if I misinterpreted, I am far from an expert on stock management.

I think a lot will  depend who or what is the money coming from. A large investor might hold tell its way up but can they do that. Or does it have to sell at that price in the agreement?

Barron’s article regarding the funding:

https://stocks.apple.com/AtmAXjhYGSMOurIt3Fpkr9Q

STOCKSTOWATCHTODAY BLOG

Fisker Stock Drops on Capital Raise. It’s Buying Time.

F isker stock is higher after the electric-vehicle start-up announced plans to raise money. Shares had been in the red ahead of the market open, and while a dip after any capital raise isn’t surprising, the move shows Fisker has access to the one precious resource all start-ups need: cash.

Monday, Fisker (ticker: FSR) announced it was raising $300 million in convertible notes by selling $340 million in face value at a 12% discount to an institutional investor. Fisker has the right to require the investor to buy another $113 million of the notes, and the investor has the right to buy another $227 million. The deal is expected to close Tuesday.

The convertible notes can be converted at $7.80 a share, subject to deal terms. Fisker stock closed Friday at $6. Shares were down more than 5% in premarket trading, but have rebounded quickly and are up 1.5% at $6.09 a piece, while S&P 500 and Nasdaq Composite futures are off 0.1% and 0.3%, respectively. 

It’s not a surprise that shares were slipping. The convertible debt could potentially become about 100 million more Fisker shares, diluting the 367 million shares outstanding today. Each share now represents a little less of the company than before the issuance. As a consolation, however, investors don’t have to worry about interest payments, as the notes don’t pay any, one reason why they were sold at a discount to the face value.

Investors can also take solace in the idea that Fisker still has access to capital, even if the stock has dropped 36% over the past 12 months headed into Monday trading. Lack of capital claimed an EV start-up in June when Lordstown Motors (RIDEQ) filed for bankruptcy protection. 

Building a car company from scratch is difficult and requires a lot of money. Tesla (TSLA) used roughly $9 billion before it began generating consistent free cash flow around 2019. 

Fisker has chosen a more capital-efficient way to launch. It doesn’t own a manufacturing plant. Instead, Magna International (MGA) is assembling Fisker’s first vehicle, the Ocean SUV.  

Still, Fisker has spent about $1.1 billion developing its business over the past couple of years, and Wall Street expects another $300 million in cash flowing out of the company in the final three quarters of 2023.

Fisker ended the first quarter with roughly $650 million in cash, which seems like more than enough for now. But make no mistake—it’s important to raise money before the need is critical.

Thankfully, Fisker seems to understand that. 

Write to Al Root at allen.root@dowjones.com

The Barron’s was part of a live feed, not an article, they updated the feed throughout the day. The headline stayed because the drop happened before the open.

@kitaz so if a big big investor or a large company it will not matter from where the money comes from. I would think if it goes up like Rivian they would not want to sell  or at least hold tell they make x amount   
also does the money have to be used before they sell ?

@mtn-ranger Matt do they have to list who or what company is getting the senior note ? Thanks Bill