Here's why Investors Are Suddenly Thrilled About Fisker Stock

Before the stock market opened for trading on Monday, it’s safe to say few investors or pundits believed struggling electric vehicle (EV) maker Fisker (FSR 13.55%) would have a banner day. Yet that’s exactly what happened; the company’s share price vaulted nearly 14% higher on Monday to put it within striking distance of the psychologically important $1 per-share level.

Much of this had to do with Fisker’s latest news about its sales efforts, while bargain-hunting throughout the EV sector also played a role. Were investors right to be so bullish on this manufacturer, though?

Dealer open house

The immediate catalyst in Fisker’s rise was its announcement that it will conduct a dealer open house in its Los Angeles-area headquarters on Tuesday.

It seems the EV company, which so far only offers one base model (the Ocean SUV), has a pool of such folks to work with. According to its namesake CEO Henrik Fisker, more than 120 dealers both on this continent and in Europe have expressed interest in selling the company’s vehicles.

Fisker is currently undergoing a bold shift in sales strategy. It is moving from the direct-sales model that has been favored by upstart EV manufacturers to a more traditional “dealer partnership” regime. This is no-haggle pricing combined with larger proprietary “territories” for dealers to ensure they’ll be making good money hawking Fisker vehicles.

Broad EV stock rally

The Fisker dealer open house coincides with a spate of EV stock bargain-hunting that started on Monday. Like Fisker, many EV companies have slumped in price on the exchange for a number of reasons. These include uninspiring quarterly results from sector leader Tesla and slowing growth in EV sales overall.

While the investor reaction to Fisker’s news was understandable and the broad rally somewhat justifiable, people should exercise caution here. Not all EV stocks are created equal, and for the most part, the sector remains volatile. Fisker certainly has potential with its strategic shift, but the company still has to prove it can run a viable and thriving business.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.

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