FSRN-- As promised:
Position: 1,000,000 shares, cost basis .041.
What I am about to endeavor to convey through this post is predicated upon over twenty-five years of investing, experience related to debt covenants, lines of credit, subordinated notes and SEC filings to include quarterly reports, Form 4's, etc...All materials included within this post have been derived from publicly available reports, investor acumen, and a whole lot of gut instinct.
Now that you know my investment position and experience, let's get to the heart of it.
Henrik Fisker was a TESLA executive vice president in charge of car design. At some point, Fisker's ideology on future designs was panned by Musk and Fisker decided to take his talents and visions to his newly formed EV competitor line. Fisker had no trouble garnering venture capital to finance this upstart company. In fact it was so easy, that Fisker spent felonious amounts of money attempting to design the perfect EV car to compete with TESLA. Problem was that all of that time and energy was wasted in trying to perfect the car design, holding up production which resulted in bankruptcy filing in 2013. Subsequently, Fisker acknowledged his mistakes and waited for another opportunity to make good on his company and vision. That opportunity came through a few years ago, and Fisker promised his investors that he would not make the same mistakes again. He was partially true to his word.
Fisker designed the Ocean, a car with side by side comparisons to TESLA, including one from Motor Trend, whereupon the Fisker OCEAN model traveled further than the TESLA. To be fair, the disparity between the TESLA model and the OCEAN model was evinced within the cosmetics of the TESLA model which had better quality related to comfort and luxury relative to MSRP between both vehicles. At least Fisker was producing vehicles this time. The Manhattan Beach production facility had all of the bells and whistles and once procured by Fisker, there was an aggressive and highly ambitious production schedule, with eyes to expand to other models. Although cars were being produced, the high price point relative to similar TESLA vehicles, was met with consumer indifference and tepid buying. Believing that his company would press through, he continued to over produce and tinker with modifications. First red flag was when they withdrew yearly guidance, predicated upon less sales than anticipated. This one domino would prove to be the tipping point on a series of events over the next three months, that would once again put Fisker's company on the brink of collapse.
Subsequently, severe price reductions on their Ocean car line did not inspire the consumer confidence they had hoped for. Additionally, the recoupment of capital expenditures from already produced vehicles did not reach levels the company executives had hoped for. Then, Nissan started to poke around Fisker automotive, with an eye to possible merge/acquire Fisker cheaper, was met with indignation by Fisker himself. This indignation manifested through Fisker's own words stating, "That offer was insufficient." Nissan concluded their interest in Fisker at that point. Once again Fisker was on the brink and he made the decision to leverage upcoming 2025 debt covenants against committed cash in the bank. This was probably the only way Fisker could keep the dream alive. This was a strategically brilliant move, because at this point, if the company was going BK again, then so be it. This point is crucial to understanding how we got here, and what likely comes next.
Henrik Fisker is a fantastic car designer, engineer and visionary related to the EV market, but an awful businessman. Although Fisker has not yet fully identified the unnamed institutional investor that provided the company a $3,500,000 lifeline, tied to fully guaranteed notes due 6/24/2024. Additionally, that same institutional investor agreed to provide another $4,000,000 in additional financing. Because these two financial lifelines are tied to end of June maturity, this unnamed institutional investor is ostensibly at the head of the line so to speak if Fisker goes BK. Now ask yourself, why even bother screwing around with this financing if the company's fate is sealed? Exactly, it makes no sense whatsoever. SOMETHING IS INDEED GOING ON.
Right now, the officially unnamed institutional investor, which Fisker transcendentaly identified last Wednesday, is attempting to rally all debt holders with significant investments in this company to renegotiate the terms and conditions of these debt covenants and the impending maturity dates of same. The argument to be made here is that the unnamed institutional investor currently owns the most amount of company debt and does not want to take such a haircut. Buoyed by the terms and conditions of the aforementioned lifelines, against the real prospect of BK so soon, this unnamed institutional investor has almost nothing to lose related to the $7,500,000 it just provided. Henrik Fisker certainly does not want to fail again and it would appear from the recent press release, his ability to autonomously run his company, at least financially, has been wrestled away. This unnamed institutional investor is calling the financial aspects of Fisker automotive for the foreseeable future.
If you buy into the alacrity with which this resolution will be determined, 6/28/24, then you must also consider why the most recent financing is happening at all. Additionally, as CJ previously articulated in public postings, the money manager assigned to this rapid turnaround, just finished up with Carvana and now is assigned to Fisker. All credit for this observation should go to CJ, as she was first to point this fact out. I could go on and on about all of the nuances of this situation, and where we end up. I encourage everyone reading this post to perform their own DD and determine their own level of risk and or risk aversion.
FSRN is currently priced for BK, any alternative to this will be a huge boon to all of us still holding shares, and thus my own risk tolerance at this point is warranted.
Final points to consider: I personally do not care about Fisker automotive, their cars or the future of EV automobiles. I am here to capitalize on an equity being overly punished for fiscal mishaps, relative to my own DD in attempting to discern what is going on here. It all adds up, at least for me.
PRICE TARGETS: No BK/debt maturity dates pushed out to later 2025 or even 2026. This equates to a price per share of .25--.67 cents within the next 30 days.
Longer term, back over $1.00 by September/October. After that, you will have to derive your own price targets because I will be long gone by then.
My attempt to share my thoughts on this situation is exactly that, MY THOUGHTS.
Wishing all great success, health and prosperity.
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