NYSE Takes Action Against Fisker
On Monday, the New York Stock Exchange (NYSE) announced that it will immediately suspend trading shares of Fisker Inc., an electric vehicle (EV) startup. The exchange has also decided to take steps to delist the company from its stock market. According to the NYSE, Fisker’s stock is no longer suitable for listing due to "abnormally low" price levels.
Background on Fisker’s Financial Struggles
This move by the NYSE comes a month after Fisker was warned that its stock price had spent 30 days trading below $1, putting it out of compliance with the exchange’s rules. The company can review the NYSE’s determination, but it has stated in a recent filing that it expects its stock to be moved to an over-the-counter market such as OTC Pink.
Consequences of Delisting
The delisting has triggered repayment clauses in two outstanding loans that Fisker cannot currently afford, which could have a "material adverse effect" on the business. This development is just one of several challenges facing the company, including complaints from customers, lawsuits, and federal investigations.
Recent Setbacks for Fisker
Monday marked a tumultuous day for Fisker, with shares falling more than 28% before trading was halted. Earlier in the day, the company announced that it had lost a potential deal with Nissan, a large automaker. The loss of this deal has also endangered a recently announced attempt at securing emergency funding.
Why Nissan Terminated Negotiations
Fisker did not provide an explanation for why Nissan terminated negotiations, which were a critical closing condition for a potential $150 million convertible note announced last week. However, the company stated that it will ask the unnamed investor to waive the closing condition.
Escalating Problems at Fisker
Fisker’s problems have been escalating for months, including complaints from customers, lawsuits, and federal investigations. The imperiled EV startup has struggled to sell its Ocean SUV in the early going, underperforming its own internal sales goals, as reported by TechCrunch in January.
Pivoting Away from Direct Sales Model
In an attempt to address these challenges, Fisker pivoted away from a direct sales model and turned to dealerships to help drive sales. However, the company has also struggled with quality problems that it has at times had difficulty solving, according to internal documents.
Layoffs and Financial Struggles
In February, Fisker laid off 15% of its staff (around 200 people) and last week reported having just $121 million in the bank. The company has paused production and warned investors that it would not survive a year without a fresh infusion of cash.
Timeline of Events
- January: TechCrunch reports on Fisker’s struggles to sell its Ocean SUV, underperforming internal sales goals.
- February: Fisker lays off 15% of its staff (around 200 people).
- Last week: Fisker reports having just $121 million in the bank and pauses production.
What’s Next for Fisker?
As Fisker navigates this challenging time, it is essential to consider the company’s future prospects. With a delisted stock and mounting financial struggles, it remains to be seen whether the EV startup can recover and achieve its goals.