Electric vehicle (EV) maker Fisker (FSR 13.55%) has been putting a large effort into promoting its new sales strategy as it shifts to a dealer network model. Investors seem to be buying into the plan, too.
Today, after Fisker announced it will host a dealer open house tomorrow, shares surged as much as 17.5%. As of 12:15 p.m. ET, the stock was still holding on to a gain of 7.7%.
Focusing on cash flow
Fisker says it now has more than 120 dealers in North America and Europe interested in partnering with the EV start-up. The company was experiencing additional cost and logistic difficulties as it tried to ramp up its initial sales using a direct sales model for its customers.
By adding dealership sales options, it expects not only to sell more vehicles, but also to enhance its operating cash position. Vehicles will remain in its inventory for a shorter time, and Fisker will recognize revenue when its EVs are sold to dealerships. The company hopes enhancing cash flow will help it ramp up more quickly as it adds models to its slate of vehicles.
New EVs on the way
Fisker currently sells its Ocean fully electric SUV but has new vehicle models on the way. It expects to begin shipping its cheaper PEAR urban-style EV in 2025, followed by an electric pickup truck called the Alaska.
Investors have been skeptical, though, as the company ran into early logistical headwinds. Fisker stock hit a new all-time low last week. Fisker expects its new sales strategy to be the catalyst for the business — and presumably the stock price — to recover.
Investors should remain cautious, though. As shares bounce off a low point, it’s prudent to wait for more results from its business strategy and reactions from its dealer open house tomorrow before jumping in with both feet.
Howard Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
