over 2 years ago • 3 mins
Full-time investor and a curious mix of optimism, pessimism, pragmatism and realism.
Fisker (ticker: FSR). A case for 5-10x upside by 2025.
Fisker is a California-based automotive design and development firm with aims to sell electric vehicles (EVs) in multiple geographies by the end of 2022. It outsources manufacturing expertise to reputed third-parties.
If Fisker achieves their targeted production of 250,000 vehicles per year with pricing per vehicle of about $30,000 they will generate a revenue of $7.5 billion in 2025. Fisker is currently trading at about 0.8x that forecast for 2025 revenue – while Tesla trades at 8x expected 2025 revenues of $100 billion and NIO trades at 5x 2025 revenues of $19 billion. If Fisker is valued with similar multiples, its market cap will exceed $55 billion, giving it an upside of nearly 10x. A more conservative discounted cash flow (DCF) model reveals a price target of $95, about 5x more than the current stock price.
Fisker’s asset-light business model enables the company to scale production rapidly and remain product-oriented as they have outsourced manufacturing of EVs. However, their partners will have to execute flawlessly and any delay in timeline will naturally affect projected revenue estimates. Fisker is also relatively unknown compared to established EV brands like Tesla and therefore faces severe competition risk. As Fisker’s timeline for delivery is very aggressive, it is expected that the stock price will gain or fall rapidly and price will be very volatile. Fisker represents an attractive risk/reward play but should only form a small part of any portfolio.
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