The New York Stock Exchange (NYSE) announced on Monday, March 25th that it will halt trading of electric vehicle (EV) startup Fisker’s shares immediately. This indicates a potential delisting of the company from the stock exchange due to “abnormally low” stock prices.
This action follows a warning issued to Fisker by the NYSE a month ago, indicating the company’s failure to maintain its stock price above $1 for 30 consecutive days, violating exchange listing requirements.
Fisker, facing this dire situation, acknowledged in a recent filing that it anticipates its stock will transition to an over-the-counter market, such as OTC Pink. The company also highlighted that the delisting process has activated repayment obligations on two significant loans, funds for which the company admits it does not have, potentially leading to severe negative impacts on its operations.
The trading suspension came after a particularly challenging day for Fisker, with its stock plummeting over 28% before the halt. This drop was partly due to Fisker’s disclosure of a lost deal with a major automaker, reported to be Nissan. This loss not only affected Fisker’s stock value but also jeopardized a critical $150 million convertible note deal announced previously. Fisker intends to negotiate with the investor to overlook the failed automaker agreement as a deal condition.
Fisker’s Ongoing Challenges
Moreover, Fisker’s ongoing struggles extend beyond stock market woes. Their challenges include:
- Customer dissatisfaction: Leading to a pivot from direct sales to dealership partnerships.
- Legal challenges and federal investigations
- Quality issues: Persistent problems with its vehicles, recognized internally.
- Sales underperformance: Specifically, its struggles to sell the Ocean SUV as anticipated.
In an effort to mitigate its financial strain, Fisker enacted a 15% workforce reduction (approximately 200 employees) in February and has recently reported having only $121 million available. With halted production and a stark warning to investors about its precarious financial standing without further investment, Fisker’s future hangs in the balance.
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Featured Image courtesy of PATRICK T. FALLON/AFP via Getty Images