Fisker (NYSE: FSR) stock price has found itself between a rock and a hard place. Its meltdown continued this week, reaching a record low of $0.3038, which is sharply lower than its all-time high of $31.95. Its market valuation has tumbled from over $12 billion to less than $200 million.

Fisker is facing a mountain of challenges, which are threatening its future. On a broader aspect, like all electric vehicle (EV) companies, it is in an industry that is going through challenges. Demand growth has slowed, margins have thinned, and inventories in key markets have soared.

Internally, things are also not going well. While its revenue growth is accelerating, its losses and cash burn are getting at an uncontrollable place. 

Fisker’s revenue surged to more than $200 million in the fourth quarter of last year. In the same period, its net loss came in at over $400 million. It had a net loss of over $762 million in 2023, its biggest on record.

It is not surprising that Fisker, a company that is still in its early stages, is losing substantial sums of money. The same is happening among companies like Rivian and Lucid Group which have been selling thousands of vehicles per quarter.

The challenge that Fisker is facing is that its balance sheet cannot handle the substantial losses for now. It ended last quarter with over $326.8 million in cash, down from $739 million in the same period in 2022.

Fisker has even issued a going concern warning, signalling that the management believes that the cash could run out soon. 

A ray of hope is that Nissan seems interested in investing in the company because of its upcoming pickup truck. However, as I wrote here, it is highly unlikely that Nissan will make this investment, especially now that the company is in turmoil. 

Instead of investing $400 million in its pickup business, it can just acquire it outright since Fisker’s market cap has dropped to $166 million. All this means that the company is in a deep hole that will be difficult to come out.

FSR chart by TradingView

The weekly chart shows that the FSR stock price has been in a strong bearish trend after peaking at $32 in March 2021. As a result, the shares have moved below all moving averages, signalling that bears are in control.

The stock has dropped below the important support at $4.42, its lowest level in April last year. It has also moved below the Ichimoku cloud indicator. 

Further, the Relative Strength Index (RSI) and the Stochastic Oscillator have remained below the oversold levels. Therefore, the stock will likely continue falling in the coming weeks as demand evaporates. The key support to watch will be at $0.30.

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