Equities

Fisker Withdraws 2024 Financial Guidance Amid Severe Struggles

Fisker halts Ocean SUV production, withdraws 2024 guidance amid financial turmoil, seeking $150M in high-risk financing.

By Jack Wilson

4/4, 05:52 EDT
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Key Takeaway

  • Fisker withdraws its 2024 financial guidance amid severe financial struggles, halting Ocean SUV production for financing.
  • Shares delisted from NYSE, now trading at 2 cents on over-the-counter markets under "FSRN" due to low stock price.
  • Company explores strategic alternatives and secures $150 million in high-interest convertible debt to navigate crisis.

Financial Struggles Intensify

Fisker, an electric-vehicle start-up, has been facing significant financial difficulties, leading to a series of challenging developments for the company. In late February, Fisker had projected the delivery of 20,000 to 22,000 units in 2024, following a year where just under 5,000 vehicles were delivered. However, these expectations have been withdrawn as the company's situation has become more precarious. Fisker paused the production of its Ocean SUV in mid-March while seeking additional financing, indicating a critical need for capital to continue operations. The company's shares were delisted from the New York Stock Exchange due to an abnormally low stock price, now trading for about 2 cents a share in over-the-counter markets under the symbol "FSRN."

Seeking Solutions Amid Crisis

In response to its financial crisis, Fisker has been exploring various strategic alternatives. These include potential in or out of court restructurings, capital markets transactions, repurchases, redemptions, exchanges, or other refinancings of the company’s existing debt. Additionally, Fisker is considering the issuance of equity securities, the potential sale of assets and businesses, or other strategic transactions as means to secure its future. The company's recent filing with the Securities and Exchange Commission outlines these potential paths forward, highlighting the uncertainty and complexity of the situation.

Financing Efforts and Production Pause

Fisker's attempt to secure financing has resulted in the acquisition of some costly capital. The company announced a commitment to raise approximately $150 million by issuing up to $167 million in convertible debt. This financing comes at a steep price, with the notes accruing interest significantly above the market rate, indicating the high risk associated with lending to the company. Concurrently, Fisker announced a pause in production for six weeks to align inventory levels and progress strategic and financing initiatives. This pause reflects the company's efforts to manage its resources carefully while seeking a stable financial footing.

Board Changes and Market Reaction

Amid these financial and operational challenges, Fisker Inc. announced the withdrawal of its financial guidance for 2024, underscoring the uncertainty surrounding the company's future. Bill McDermott, CEO of ServiceNow Inc., resigned from Fisker's board and its audit committee for governance reasons, unrelated to any disagreement with the company. John S. Dubel, known for leading the restructuring of bankrupt SunEdison Inc., has been appointed to the board, signaling a potential focus on restructuring efforts. Fisker's stock has experienced a significant decline, with its price halving in the past 12 months, reflecting investor concerns about the company's viability.