PreMarket Prep Stock Of The Day: Fisker

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

The volatility continues in the special purpose acquistion company sector, particularly in issues focused on the development of electronic vehicles.  With that in mind, Fisker Inc. FSR is the PreMarket Prep Stock of the Day.

The Company: Fisker says it's revolutionizing the automotive industry by developing the most emotionally desirable and eco-friendly electric vehicles on earth. 

Fisker's Early Price Action: As is so common with SPACs, they begin trading at the $10 level and change hands just above and below that level until the target company is identified. 

From October 2018 through June 2020, Fisker traded in a range from $9.51 to $10.98, only reaching the upper boundary in late June.

Fisker's Early Volatility: In only three trading sessions, July 9-13, the issue lifted from its July 8 close ($10.81) to $21.60 on July 13 before retreating to end that session at $15.06.

The catalyst for the rally was that Spartan Energy Acquisition was in talks to buy electric vehicle company Fisker Automotive and take it public. 

Once the initial euphoria faded, the issue drifted lower to the $11.50 area before mounting another rally to the $18.24 on Sept. 15.

In October, when many of the SPACs were being abused, the issue fell all the way to $8.70 on Oct. 28, then geared up for another rally.

Street Gets Carried Away: Over the next month, the issue caught a relentless bid and far surpassed its former all-time high by a wide margin. 

This rally did not peak until Nov. 27 at $23.63. Fisker posted its all-time closing high Nov. 25 at $21.61.

Another Retreat For Fisker: Since making its all-time high, the issue has been lower in seven of the last nine trading sessions, with the two outliers being a flat day and another with a small gain.

In Thursday’s session, the issue is having its worst day on a percentage basis of the entire selloff. 

The catalyst for the decline is the uninspiring initiation of coverage of the issue at Wolfe Research with an Underperform rating and a price target of $16.

The stock ended Thursday's session down 10.43% at $15.03. 

Buy The Dip In Fisker? PreMarket Prep co-host Dennis Dick said: “If you still think the story is not over, I kind of like Fisker.”  He tweeted this earlier Thursday:

Lots of EV plays out there, most of them are not going to make it. I think @henrikfisker is the real deal though. Bought some $FSR today for the long term account. https://t.co/UeCmGsQIBK

— Dennis Dick (@TripleDTrader) December 10, 2020

The entire discussion on the issue from today’s show can be found here. If interested in hearing more details on Tesla Inc. TSLA, rewind to the start of the broadcast:

Disclaimer: PreMarket Prep Dennis Dick is long shares of Fisker Corp.

Courtesy photo.