Another electric vehicle maker is making its entrance into this market. Considering how well EV makers have performed so far this year, it’s understandable why companies are getting started up in this market faster than ever. Besides Tesla, Nio, and Nikola, a new company called Fisker (NYSE: FSR) just went public today on the U.S. markets, jumping almost 20% in the morning.
While most companies go public via an Initial Public Offering (IPO), Fisker went public through what’s known as a special purpose acquisition. This is when a private company buys out an already public, but relatively obscure, company via a merger, from which it then renames itself and changes its ticker to the new company. In the process, Fisker ended up raising around $1 billion in funding through this offering, which the company desperately needs in order to ramp up production.
Unlike most IPOs, however, which tend to do quite well over the long run, special purpose acquisitions usually are the opposite. They tend to jump a fair bit after their initial announcement but then underperform the markets on the whole. However, considering the amount of excitement there is in the electric vehicle market, it’s quite likely that this hype will help carry Fisker over. In this sense, a rising tide lifts all ships.
“The main reason I think this is so exciting is that the EV market is developing. There are less than 2 million EVs sold globally, but the total market is 80 million. Now, we’re seeing a slow uptake right now, but 2022/2023 is when it’s going to explode and when you’re really going to see the EV market come together and accelerate,” said Fisker CEO Henrik Fisker in a CNBC interview on Monday. “Because of that, we are starting right now. It takes 2-3 years to develop a vehicle, so it’s really a matter of whether someone wants to come in along from the ride from the beginning with us, and a lot of people do.”
The big risk-factor for Fisker is that the company is still in the prototype stage, with no vehicles at all expected until 2022, if not later. At the same time, besides this cash infusion, Fisker has pretty much no income at all and mainly seems to be fuelled by the overall market excitement. The company does plan to announce a prototype sometime in 2021, but that’s still a few months as well, at the soonest.
Fisker was started up by Henrik Fisker, who previously was a well-known car executive and designer for another green automobile manufacturer, Fisker Automotive. This particular venture ended up going bankrupt back in 2013. Despite this, Fisker’s past experience in this green car market is seen as a good thing and that his previous company’s failure is more to do with the state of the market at the time in comparison to today.
Shares of Fisker shot up as much as 20% on Monday, although they ended up giving back some of those gains. Right now, the stock is up a solid 10%, and could continue to rise alongside other EV stocks in the near future, if only by association.
