It seems like every month we hear of another country enacting laws to ban the sale of gas-powered vehicles over the next decade. The trend has resulted in investors sitting up and paying attention to EV stocks now more than ever.
September is known as a month when people go back to reality after the fun summer vacations and start thinking about their finances. Stocks are a great way to create generational wealth, and the EV industry is becoming a very safe investment option even for beginner investors. So here is one EV stock that we think investors should consider buying in September.
Fisker (NYSE: FSR) is a design-forward, digitally-driven firm that is building the next generation of EVs. The company is starting to capture lots of attention on Wall Street with its innovative, unique business model.
In early August, shares in the company bounced 20% in one day after an analyst at Morgan Stanley stated that Fisker is the unique EV startup that is likely to launch its models on time. The analyst also added that its share price has the ability to more than double in a year’s time.
Fisker is being praised for its business model that sets out to be an EV consumer-experience “architect.” The company has begun contracting with auto parts, electronics, and other makers in the hopes of diversifying its production. Some experts claim that this strategy is suggesting the firm is trying to become the “Apple of autos.” As Apple focuses on the design and consumer interfaces, this is likely a good business model to follow.
In February, Fisker also stated that it had reached a deal with electronics market leader Foxconn Technology Group on top of its partnership with auto parts maker Magna International. The California-based company has also confirmed that it will have four vehicles in production by 2025, three with Magna and one with Foxconn.
Is Fisker stock a buy?
While the firm is taking a different approach to EV rivals Ford (NYSE: F) and Tesla (NASDAQ: TSLA) in the way it is outsourcing a lot of the production of its supplies, this might help the company overcome supply chain issues. Chip shortages, in particular, have plagued EV companies as of late so perhaps a solid relationship with suppliers will help the company.
However, critics say that Fisker is over-reliant on these suppliers and therefore lacks the special components that make its competitors succeed. That does not mean that there isn’t room for other players with different strategies in the space though. Studies have shown that the EVs could hit 10% of total global passenger vehicle sales by 2025 and they are likely to rise to 28% in 2030 and 58% in 2040, meaning there is plenty of opportunities for other companies to thrive in the busy space.
In August, Fisker posted a narrower quarterly loss than analysts expected and ended the quarter with $962 million in cash. It has also confirmed that it is due to start producing its first vehicle, an all-electric SUV, in 2022. On the call, CEO, Henrik Fisker, stated:
“We continued making steady progress in Q2 2021 on our key priorities — appealing product, product lifetime profitability, on-time start of production, and streamlined program costs.”
While the stock is down 5% year-to-date, we think this might just be the next EV stock to really benefit from the sweeping EV mania.
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Financial Writer at MyWallSt
Nicole's favorite stock is Etsy because she loves its original and handmade items. She believes people are going to stop buying mass-produced items and start purchasing ‘one of a kind’ fashions and furnishings. In a world of sameness, Etsy has the advantage.