Electric Vehicle Company Fisker Denies Bank Guarantees, Short Report Allegations: What Investors Should Know

Zinger Key Points
  • Past issues running vehicle companies are among the issues dragged out in a new short report against Fisker.
  • A partnership with Magna is the center of the report, and the automaker is challenging the allegations Thursday.
Electric Vehicle Company Fisker Denies Bank Guarantees, Short Report Allegations: What Investors Should Know

Electric vehicle company Fisker Inc FSR is the subject of a new short report out Thursday. The company issued a response to the short report and plans to further demonstrate against what it said are misleading claims.

What Happened: A short report from Fuzzy Panda Research issued Thursday laid in heavily on the past history of company CEO Henrik Fisker and made new allegations about the company’s partnership with Magna International MGA, which was announced back in October 2020.

“We are short Fisker, exposing Fisker ‘undisclosed bank guarantees' of $800 million. Almost all of the cash. Henrik Fisker, CEO, is a pathological liar,” Fuzzy Panda tweeted Thursday.

The Twitter account also said that Fisker’s asset-light business model is “liability-heavy.”

On Thursday, Fisker issued a response to the short report and said it plans to issue additional responses in the future.

“Fisker issued a cease-and-desist letter to the firm, which announced a short position in Fisker stock at the same time it released a purported assessment containing numerous false and misleading allegations about Fisker’s business operations and its relationship with manufacturing partner Magna,” Fisker said.

Fisker said it does not have a bank guarantee with Magna. The company also fought back at allegations about not owning the intellectual property of the Fisker Ocean platform and using carryover parts from other vehicle platforms.

The short report author said they spoke to former employees of Fisker and Magna who say the cash is tied up and there are “large undisclosed bank guarantees that sets a minimum cash balance.”

Fuzzy Panda said the guarantees could prevent Fisker from funding operating losses with the cash on its balance sheet and could instead force the automaker to have to raise cash to pay expenses.

“The likely need to raise significantly more cash via the ATM in coming quarters to fund increasing losses.”

The report said that Fisker has guaranteed to pay Magna on certain items including manufacturing costs and margins and committed to certain volume production levels.

“Henrik Fisker reminds us of Trevor Milton from Nikola and SBF from FTX. All three are charismatic leaders that have shown they are willing to lie and obscure the truth to get what they want.”

The report said Fisker did not learn from his past mistakes at his previous company that later declared bankruptcy.

Related Link: Tesla Rival Fisker's Debut Model Ocean SUV Goes Into Production Today: What Investors Should Know

Why It’s Important: The partnership signed with Magna said the Fisker Ocean SUV would be produced at a Magna owned facility in Europe beginning in late 2022. Magna received warrants to purchase up to 6% of Fisker stock as part of the agreement. No other financial terms of the deal were disclosed.

Fisker launched production of the Ocean SUV, an electric vehicle it has been working on, in November.

The Ocean SUV has a starting price of $37,499 and could be a competitor to electric vehicle market leader Tesla Inc TSLA. Fisker has past experience with Tesla and a longstanding feud with CEO Elon Musk.

The Fisker Ocean has over 62,000 reservations.

FSR Price Action: Fisker shares were trading 1.37% higher at $7.42 Friday. Fisker shares are down 56% year-to-date in 2022.

Read Next: Fisker Ocean Unveiled At Los Angeles Auto Show: Here's What Drivers And Investors Should Know 

Photo courtesy of Fisker. 

Posted In: electric vehiclesFisker OceanFuzzy Panda ResearchHenrik Fiskershort reportSUVShort SellersTop StoriesTrading Ideas