Shares of eclectic vehicle manufacturer Fisker Inc (US:FSR) dropped -5.4% in trading on Thursday following a short seller attack from Fuzzy Panda Research. A link to the short report can be found here.
Fuzzy Panda in the report after speaking with former employees of Fisker and Magna, claimed that Fisker is no longer the “asset-light’ business that it claims to be.
The short investor told the street that they believe all of FSR’s cash is now tied up in the form of “large undisclosed bank guarantees that sets a minimum cash balance”.
Fuzzy Panda claimed that the bank guarantees with partner Magna were estimated to be worth between $790 to $825 million which would equate to the entire cash balance. They claim that the guarantees to Magna include Fisker paying for Magna’s tooling costs and manufacturing margins as well as direct manufacturing costs.
The primary attack was aimed at management for claiming to investors that they had created a better business model than other automakers in the industry. Panda believes they would better be described as “liability-heavy” rather than “asset-light”
Following the closure of trading, Fisker management issued a press release addressing the report.
In response, FSR highlighted that they believe the report was issued with a specific purpose of creating numerous false claims and misleading allegations while announcing a short position at the same time.
A representative of the company told investors “Fisker Inc. does not have a bank guarantee with Magna, and Fisker owns the intellectual property for the Fisker Ocean platform. The ocean platform does not have 80% carryover parts from any other platform”
Fisker closed the press release by stating that it would take immediate aggressive action to address the claims.
According to the Fintel platform short data, 53,300,170 shares are currently shorted equating to around ~30% of the float. The short interest has 13.12 days to cover.
There is a strong battle between long and short investors in the stock, with shorters winning the battle as FSR’s stock continues to drift lower, currently down -56% over 2022.
The Fintel platform gives FSR a short squeeze score of 78.00 which ranks the company in the top 10% of 5,060 screened global stocks.
On the Gamma Squeeze leaderboard, FSR ranks towards the bottom with a score of 13.18 as options trends for the stock have held relatively stable in recent times.
Earlier this week, institution Evercore ISI initiated coverage on several EV companies including FSR. The firm began coverage on Fisker with an ‘outperform’ rating and a $15 target price, suggesting more than 100% upside.
The broker claimed the basis for the outperform recommendation to its ‘asset-light’ structure with upside to revenue as it ramps up deliveries to ~40,000 in 2023.
On average FSR has a consensus ‘overweight’ recommendation and an average $12.40 price target. FSR is currently the 372nd most popular stock held by retail investors.
This article originally appeared on Fintel
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