Market Magic: Fisker Considers Going Public While the Getting Is Good

Fisker Inc. is reportedly in talks to go public after seeing how well other electric vehicle manufacturers (prospective or otherwise) have performed on Wall Street this year. In case you missed it, Tesla became the most valuable automaker on the planet this summer, while startup Nikola saw its shares explode through the ceiling ⁠— despite having never manufactured a single product for purchase.

It seems like complete madness, so it aligns perfectly with just about everything else that’s happened in 2020.

Granted, Nikola’s trajectory stabilized slightly after peaking on June 9th. But it’s still sitting on a $19.8-billion market cap and presumably very pleased to be in that situation. According to Reuters, Fisker saw an opportunity for itself and wants to strike before the market changes its mind about electrification. Moves need to be made quickly and wisely.

On Tuesday, Fisker announced it has raised $50 million from hedge fund investor Louis Bacon. The plan is to use the funding to spur development on the crossover vehicle it’s vying to launch in 2022. That model, dubbed the Ocean, is supposed to be Fisker’s introductory salvo against Tesla ⁠— if you can discount the Fisker Karma, which is now the Karma Revero.

We’ll spare you any extended history lessons. Basically, European auto designer Henrik Fisker wanted to pen the perfect plug-in luxury sedan with sporting pretensions and massive complications arose (note: becoming a successful automaker is insanely difficult) immediately. Bankruptcy ensued and the tooling and plans were sold to Chinese automotive supply company Wanxiang Group in 2014, which now builds the model under the Karma banner in sunny California.

Meanwhile, Fisker Automotive died only to be replaced by Fisker Inc.

With the above in mind, Mr. Fisker knows all too well that money makes the world go round, and he doesn’t want a repeat of his earlier mistakes. Automotive News reports that the public offer under consideration would adhere as closely to the Nikola blueprint as possible ⁠— and with good reason. The company’s June merger with VectoIQ Acquisition (a blank check company led by former GM executives) came roughly a day before its share price exploded.

From AN:

Nikola shares are up more than 60 percent since it went public last month through such a deal, as investors place bets on which startup will be the next Tesla Inc. Earlier this month, autonomous vehicle technology company Velodyne Lidar agreed to be bought by blank-check company Graf Industrial Corp. for $1.6 billion, fueling a rally in the latter’s shares.

Spartan Energy Acquisition Corp., which is backed by private equity firm Apollo Global Management Inc., is leading a bidding war among special purpose investment firms for Fisker, and could clinch a deal for close to $2 billion as early as next week, the sources said.

The sources requested anonymity as the deal talks are confidential. Fisker and Spartan declined to comment.

Spartan’s shares rallied on the news and were up 20 percent at $12.99 in early afternoon trading in New York on Thursday.

Blank-check firms are basically a form of black magic in the investment world, and have become increasingly popular over the last few years. Around one-fifth of all U.S. IPOs qualified as blank-check companies in 2019. Publicly traded, they’re typically a developmental-stage entity with no established business plan beyond drumming up funds for a startup or padding an IPO ⁠— usually by way of a merger.

Now, combine that with a market that seems undisturbed by what’s shaping up to be another Great Recession (or perhaps Great Depression) and an eagerness to invest blindly into burgeoning green-tech firms. Ta-da! Fisker is now swimming in cash, hypothetically speaking.

[Images: Fisker Inc.; Karma Automotive]