The company’s financial issues became apparent a couple of weeks ago with the disclosure of a cash shortfall.
Shares of Fisker Inc. plunged by about 47% in the extended session Wednesday after a report indicated that the embattled EV maker is exploring a bankruptcy filing.
The electric-vehicle startup has finally hired restructuring advisers to assist with a possible bankruptcy filing, according to people familiar with the matter, as reported by The Wall Street Journal. The company’s financial troubles became apparent a couple of weeks ago when it disclosed it was running low on cash.
In response, Fisker had initiated talks with a major carmaker, although the details of these talks remained undisclosed. Reports say the discussions were centered around options for investment or potential collaboration on electric vehicle platform development.
The decision to hire financial adviser FTI Consulting and law firm Davis Polk to explore the possibility of filing for bankruptcy highlights the seriousness of Fisker’s financial troubles.
Fisker entered the public markets in 2020 through a special-purpose acquisition company, drawing significant attention and comparisons to tech giant Apple for its focus on design and user experience, while outsourcing manufacturing.
In February, Fisker reported lower-than-expected fourth-quarter sales of $200 million, along with a significant loss of $463.6 million, or $1.23 per share. These figures were well below analyst predictions.
This isn’t the first time Fisker has faced financial difficulties. Previously known as Fisker Automotive, the company filed for bankruptcy in 2013. Founder Henrik Fisker then resigned amid board disputes but retained some brand rights and later established Fisker Inc.
The market shows a significant loss of investor trust, as Fisker’s shares have fallen by 95% in the last year, while the S&P 500 index has gained about 34%. Since its IPO on October 30, 2020, Fisker’s stock has plunged by 97%.
