Shares of Fisker Inc. bounced Friday, after an analyst recommended investors stop selling following their “precipitous drop” over the past several weeks.
CFRA analyst Garrett Nelson upgraded the stock to hold from sell, while trimming his price target to 75 cents from $1.
“In our view, the easy profits have been made on the short side in [Fisker’s stock], and while we view growing concern risk as high, the stock’s extremely high short interest…makes it susceptible to volatility,” Nelson wrote in a note to clients.
Short interest refers to the number of shares that have been bet for the stock’s price to fall, while float refers to the shares available for public trading.
The stock rose 0.8% in premarket trading, putting it on track to snap a six-session streak of record-low closes.
High short interest levels can make a stock susceptible to “short-covering” rallies, as bears close out their bets by buying back the stock. (Read more about the mechanics of short selling.)
Fisker’s short interest as a percent of float was 47.3%, according to the latest exchange data, which compares with the percentages for other highly shorted stocks of AMC Entertainment Holdings Inc.
AMC,
at 11.8%, which was an original “meme” stock, and of fellow EV makers Lucid Group Inc.
LCID,
at 26.8% and Mullen Automotive Inc.
MULN,
at 29.3%.
Don’t miss: Fisker has ‘arguably become a meme stock,’ says StockTwits.
Fisker’s shares fell below the $1 level for the first time earlier this week, amid reports that the National Highway Traffic Safety Administration was investigating the Fisker Ocean sport-utility vehicle for safety issues related to braking performance.
After declining to comment on the investigation earlier this week, the company issued a statement on Friday: “Fisker is fully cooperating with the NHTSA on this matter.”
The company said it had responded in December to customer feedback by issuing an over-the-air update to the regenerative braking system that resolved the issue. “The Fisker Ocean brake system meets or exceeds all U.S. and international performance requirements,” the company said.
CFRA’s Nelson said the NHTSA probe was “a development worth monitoring.”
In Fisker’s latest quarterly filing, the company said that it had evaluated whether it had substantial doubt about its ability to continue as a going concern. The company determined that doubt “does not exist,” as the $527.4 million in unrestricted cash and cash equivalents it had as of Sept. 30 was “sufficient” to meet working capital and expenditure requirements for at least 12 months.
The next quarterly filing is expected to be filed in mid-to-late February.
The stock has plunged 85.8% over the past three months through Thursday, while the Global X Autonomous & Electric Vehicles ETF
DRIV,
has gained 3.8% and the S&P 500
SPX,
has rallied 11.8%.
