Fisker’s Agreement Talks with Major Automaker End Without a Deal, Leading to NYSE Delisting
Fisker Inc., a burgeoning electric-vehicle (EV) startup, faced a significant setback when discussions with a leading automaker about a potential deal came to an abrupt halt. This development has culminated in the New York Stock Exchange (NYSE) deciding to delist the company’s shares due to persistently low price levels. The NYSE has also suspended trading of Fisker’s stock, which was trading at a mere USD 0.09 before the temporary halt and closed at USD 0.13 the previous Friday.
The collapse of the deal has left Fisker exploring strategic options such as restructuring inside or outside of court and engaging in capital markets transactions. This announcement emerged shortly after the company paused its electric vehicle production, raising alarms about its viability and future.
Thomas Hayes, Chairman of hedge fund Great Hill Capital, commented on the situation saying, “I can’t put it if it is next week or next year, but it is inevitable,” alluding to the looming possibility of Fisker filing for bankruptcy protection. If Fisker were to declare bankruptcy, it would mark the second failure for Henrik Fisker, an automotive designer and former Tesla consultant. His previous venture, Fisker Automotive, succumbed to the aftermath of the 2008 financial crisis and filed for bankruptcy in 2013 after receiving significant loans from the Department of Energy.
Fisker was established in 2016 and entered the public market through a merger with a special purpose acquisition company (SPAC), boasting an initial valuation of USD 2.9 billion. However, the company’s valuation has plummeted to less than USD 100 million due to a series of challenges, including supply chain disruptions, production delays, and difficulties in raising necessary funds.
Efforts to raise up to USD 150 million through the sale of convertible notes hit a snag when Fisker missed an interest payment, failing to meet a critical closing condition. Despite having sufficient liquidity, the company chose not to make the USD 8.4 million payment for some notes due in 2026. This decision was made to utilize a 30-day grace period for discussions regarding its capital structure with investors.
In an environment where raising funds has become increasingly difficult for loss-making EV startups, Fisker has also announced plans to propose a reverse stock-split to its investors at a shareholder meeting scheduled for April 24. This move aims to align with the NYSE’s listing standards after the company’s shares lost more than 90% of their value this year.
Fisker’s operational strategies have deviated from those of Tesla and other EV startups by partnering with auto supplier Magna for vehicle assembly, as opposed to investing in the capital-intensive process of building and operating its factory. Despite these efforts, Fisker has faced significant challenges in delivering its vehicles to customers due to logistical issues, having delivered less than half of the vehicles it produced in 2023.
Competing in the mid-size electric SUV market, the Fisker Ocean aims to rival Tesla’s Model Y SUV and other contenders like the Ford Mustang Mach-E. However, with the recent turn of events, Fisker’s path forward appears fraught with uncertainties as the company seeks viable strategic options to sustain its operations and fulfill its ambitions in the electric vehicle market.
