EV-Maker Fisker Files Chapter 11 Bankruptcy Protection: What's Going On With The Stock?

Fisker, Inc. FSRN shares are falling Tuesday after the company filed for Chapter 11 bankruptcy protection. 

The Details:

Fisker Group Inc., the operating subsidiary of Fisker Inc., announced it filed for Chapter 11 protection in the District of Delaware on Monday. The company said it is in advanced discussions with financial stakeholders regarding debtor-in-possession financing and the previously announced manufacturing pause will remain in place. 

Fisker also said it intends to file certain customary motions with the bankruptcy court to ensure its reduced operations are able to continue, including paying employee wages and benefits, preserving certain customer programs, and compensating needed vendors on a go-forward basis. 

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"Fisker has made incredible progress since our founding, bringing the Ocean SUV to market twice as fast as expected in the auto industry and making good on our promises to deliver the most sustainable vehicle in the world,” said a Fisker spokesperson.

“We are proud of our achievements, and we have put thousands of Fisker Ocean SUVs in customers’ hands in both North American and Europe. But like other companies in the electric vehicle industry, we have faced various market and macroeconomic headwinds that have impacted our ability to operate efficiently. After evaluating all options for our business, we determined that proceeding with a sale of our assets under Chapter 11 is the most viable path forward for the company.” 

Fisker shares are falling on heavy trading volume with more than double its average number of shares already traded in the session, according to data from Benzinga Pro.

Should I Sell My FSRN Stock?

Whether to sell or hold a stock largely depends on an investor's strategy and risk tolerance. Swing traders may sell an outperforming stock to lock in a capital gain, while long-term investors might ride out the turbulence in anticipation of further share price growth.

Similarly, traders willing to minimize losses may sell a stock that falls a certain percentage, while long-term investors may see this as an opportunity to buy more shares at a discounted price.

Shares of Fisker have lost 99.64% year to date. This compares to the average annual return of -85.85%, meaning the stock has underperformed its historical averages. Investors can compare a stock's movement to its historical performance to gauge whether this is a normal movement or a potential trading opportunity.

Investors may also consider market dynamics. The Relative Strength Index can be used to indicate whether a stock is overbought or oversold. Fisker stock currently has an RSI of 55.66, indicating neutral conditions.

For analysis tools, charting data and access to exclusive stock news, check out Benzinga PRO. Try it for free.

FSRN Price Action: According to Benzinga Pro, Fisker shares are down 53% at 2 cents at the time of publication Tuesday.

Image: Courtesy of Fisker, Inc.