TipRanks
Fisker vs. Nikola: Which EV Startup Stock Is Primed For Upside In 2021?
Electric vehicles (EVs) are proving to be an increasingly popular mode of transportation in different countries, including the United States, for their concept of clean energy and zero emissions. The U.S. Government has also been pushing for their adoption, fueling a rise in EV sales. According to a Bloomberg New Energy Finance report from last year, sales of EVs are expected to account for 10% of all passenger vehicle sales globally by 2025, and are expected to rise to 28% by 2030. EVs are anticipated to comprise around 58% of all global passenger vehicle sales by 2040, the report says. Using the TipRanks Stock Comparison tool, let us compare two EV-based startups, Nikola and Fisker, and see how Wall Street analysts feel about these stocks. Fisker (FSR) Fisker is a startup that is still in the process of developing its first EV, Ocean. The company announced its first-quarter results yesterday. Fisker posted revenues of $22,000 in Q1 and reported a net loss of $0.63 per share that was wider than the $0.01 per share loss in the same quarter last year. FSR had cash and cash equivalents of $985.4 million and zero debt as of March 31, while its operating loss was $33.1 million. Fisker’s Chairman and CEO Henrik Fisker stated that the company’s program to develop the Fisker Ocean remains on track and elaborated on the company’s partnerships with Foxconn and Magna on an earnings call following the results. “The advantage of our partnerships with Magna and Foxconn is undervalued. Our manufacturing partnership strategy began as a way to de-risk production cost, timing, and quality, enabling Fisker to focus efforts on customer-facing areas. The addition of a second platform and influential supplier has created a major supply-chain advantage as well. We are already seeing evidence of better access and pricing for high-value technology shared across programs (e.g., battery, high-performance chips, displays, etc.), and we are already benefiting from the influence of each partner to ensure supply of critical components such as chipsets and semiconductors.” According to Fisker, there were 16,000 reservations for its Ocean SUV as of May 17 and more than half of these reservations are from people who currently don’t own an SUV. This indicates that there could be a larger addressable market for its vehicles. FSR intends to price this SUV starting at $37,500. When it comes to operating expenses like non-GAAP research and development (R&D) and selling, general and administrative (SG&A) expenses in FY21, the company expects them to be between $210 million and $230 million and between $30 million and $40 million, respectively. The rise in operating expenses is a result of additional costs of $30 million related to Project PEAR (Personal Electric Automotive Revolution). Capex is forecast in the range of $210 million to $240 million for FY21. Separately, the company has also partnered with Sharp Corp, part of the Hon Hai Technology Group, where Sharp will manufacture in-vehicle screens, including automotive display systems. The screens and technology developed by Sharp will support the Ocean SUV, Project PEAR, and another two potential Fisker vehicles. Last week, Fisker also signed key framework agreements with Hon Hai Technology Group (Foxconn) to jointly develop and manufacture a new electric vehicle related to Project PEAR that will be priced at below $30,000. The new vehicle will be sold under the Fisker brand and will be commercialized in markets such as North America, Europe, China, and India. Manufacturing will begin initially in the United States with production expected to start in the fourth quarter of 2023, but will later be expanded to other locations, with an estimated annual volume of over 250,000 units. Notably, Project PEAR will be Fisker’s second vehicle. The company intends to start the production of its first vehicle, the Ocean electric SUV in the fourth quarter of next year in Europe and will unveil a prototype of the vehicle, ready for production at the Los Angeles Auto Show later this year. FSR intends to deliver four different types of vehicles by 2025. Yesterday, Fisker signed a partnership agreement with U.K.-based EV car subscription service, Onto. Onto will be the company’s first customer in the U.K. Under the terms of the agreement, Onto will be the exclusive subscription/rental partner for Fisker for 2023. Fisker will supply the company’s Ocean SUV to Onto and will deliver up to 700 vehicles in 2023. Fisker also addressed the rising competition in the electric SUV market at its earnings call and said that it was confident that its Ocean SUV will grab a share of the market as it would be competitively priced and will be equipped with advanced technology. In order to upgrade the software and provide digital data services to Fisker’s SUV on the go, and monetize these digital services at a later date, the company is also setting up software excellence centers in the United States and India. (See Fisker stock analysis on TipRanks) Following the earnings, Raymond James analyst Pavel Molchanov reiterated a Hold on the stock. Molchanov said in a research note, “We are fans of Fisker’s Ocean SUV, expected to start shipping in late 2022. We have two specific questions that are keeping us on the sidelines for now, pertaining to battery sourcing and the mix of Ocean versions — the latter being especially pivotal for the future margin structure.” Shares of Fisker have tanked 13.2% in the past month. Overall, consensus among analysts is a Moderate Buy based on 5 Buys, 3 Holds, and 1 Sell. The average analyst price target of $25.14 indicates upside potential of around 106.1% from current levels. Nikola (NKLA) Nikola is a manufacturer and designer of hydrogen-electric and battery-electric vehicles (BEV), vehicle components, and electric vehicle drivetrains. Earlier this month, the company reported its Q1 results with a net loss of $120.2 million that widened from a net loss of $33.1 million in the same quarter last year. Nikola’s CEO, Mark Russell said, “During the first quarter Nikola continued to deliver on our previously communicated milestones and execute on our business plan. We have had continued success in commissioning and validating the Nikola Tre BEVs, and are nearing completion of both our Ulm, Germany and Coolidge, Arizona manufacturing facilities.” The company’s first batch of five Tre BEVs are undergoing validation testing and it expects to deliver its first Tre BEV in the fourth quarter of this year. Last month, NKLA, along with IVECO and OGE, announced the deployment of hydrogen infrastructure, where the company will install hydrogen fueling location infrastructure for original equipment manufacturers’ (OEMs) fuel-cell electric vehicles (FCEVs) across Germany. This partnership between Nikola, IVECO, and OGE is expected to facilitate the cost-effective distribution of hydrogen from production to storage and fueling locations. The company considers it an important move towards expanding its hydrogen infrastructure network in Europe. NKLA is looking at expanding its hydrogen infrastructure in the U.S. and has entered into a partnership with TravelCenters of America to install hydrogen fueling stations for heavy-duty trucks at two existing sites in California. These two stations are expected to be operational commercially by Q1 of 2023. The company has also tied up with a port trucking company in Southern California, Total Transportation Services, for vehicle trials, and the company intends to order FCEVs and 100 Nikola Class 8 BEVs. For Q2, R&D expenses are expected to be in the range of $87.5 million to $92.5 million, while SG&A expenses are anticipated to be between $62.5 million and $67.5 million. Capex for the second quarter is expected to be between $60 million and $65 million. NKLA has revised its FY21 guidance for R&D expenses and expects them to be in the range of $318 million to $328 million as a result of higher stock-based compensation expenses, while SG&A expenses are anticipated to be between $252 million and $262 million. This year, Nikola is looking forward to the start of its vehicle production on a trial basis at its joint venture manufacturing facility in Ulm, Germany, in June, and at the greenfield manufacturing facility in Coolidge, Arizona, in July. The company also expects to announce more customers who will test its vehicle fleet and additional hydrogen infrastructure partnerships. (See Nikola stock analysis on TipRanks) Following the earnings, Wedbush analyst Daniel Ives reiterated a Hold and a price target of $13 on the stock. Ives commented on the results, “It is the company’s investments into a hydrogen powered battery and the benefits of this type of electricity/battery vs. the traditional battery electric motors currently used in EV’s globally that is a key part of driving the value proposition in the eyes of investors on this story stock.” “In a nutshell, NKLA is a “prove me” story looking ahead and the company laying out a tight and step by step roadmap that investors can clearly judge success/failure will be the key to success between now and 2023 in our opinion with the chip shortage a near-term overhang,” Ives added. Overall, consensus among analysts is a Hold based on 1 Buy and 5 Holds. The average analyst price target of $18.80 indicates upside potential of around 36.7% from current levels. Bottom Line Analysts are cautiously optimistic about Fisker despite the stock offering more upside potential than Nikola as it remains to be seen how the company’s Ocean SUV will fare among the rising competition in the electric SUV market. The Street is sidelined on Nikola as the company continues to look at expanding its hydrogen-powered battery infrastructure, but it is yet to start full-fledged vehicle production at its manufacturing facilities.
