Fisker (FSRN.PK), the electric vehicle (EV) startup, may be forced to file for bankruptcy protection within the next 30 days if it fails to obtain relief from creditors and sufficient liquidity to meet its debt obligations. The company revealed this in a regulatory filing on Tuesday, highlighting its ongoing financial challenges.
The cash-strapped EV manufacturer disclosed that it had missed an interest payment of approximately $8.4 million on certain notes due in 2026, during a 30-day grace period. This failure to meet financial obligations underscores Fisker’s precarious financial position.
Fisker’s future has been cast into doubt after discussions with a major automaker for a potential investment collapsed last month. This setback has compelled the company to explore options, including restructurings and capital market transactions, either in or out of court. Furthermore, Fisker was delisted by the New York Stock Exchange in March due to its shares trading at unusually low prices.
The EV startup reported a significant reduction in its cash balance, which decreased from $736.5 million in 2022 to $325.5 million in 2023. Additionally, Fisker’s workforce has seen a decline, with approximately 425 fewer employees as of April 19 compared to the end of December. In response to its financial woes, the company plans to further reduce its workforce and streamline its operations, including scaling back its physical footprint.
Fisker has resorted to price cuts to stimulate demand and raise capital. In March, it slashed the prices of its 2023 Ocean SUV models in a bid to boost sales and address debt obligations. However, the company continues to face fierce competition in the EV market, exacerbated by consumers’ reluctance to make large purchases amid higher borrowing costs and economic uncertainty.
At the time of this publication, Fisker Inc. (FSRN) traded at $0.0333, down $0.0023 (6.31%) from the previous close. The stock’s performance reflects the market’s concern over the company’s financial stability and its ability to navigate the current challenges.#
The precarious financial situation of Fisker underscores the urgent need for decisive action, as the company navigates the complex landscape of potential bankruptcy protection to safeguard its future viability. Despite its innovative EV designs, the company’s future remains uncertain without significant intervention to address its cash flow issues and debt obligations. Fisker’s ability to secure funding and implement effective restructuring measures will determine whether it can weather the storm and emerge stronger in the highly competitive EV market.
