FSR Stock vs. Fuzzy Panda: What to Know About the Fisker Short Seller Report thumbnail

FSR Stock vs. Fuzzy Panda: What to Know About the Fisker Short Seller Report

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The Fisker logo hangs on display at the November 2011 International Auto Show.

Source: Eric Broder Van Dyke / Shutterstock.com

Fisker (NYSE:FSR) stock is resiliently in the green today despite a short report from Fuzzy Panda. In the report, the short seller questions Fisker’s cash balance, intellectual property ownership and the integrity of CEO Henrik Fisker.

The report starts off by alleging that Fisker’s cash balance of $825 million as of the end of the third quarter is misleading. Instead, Fuzzy Panda believes that between $790 million and $825 million is owed to Magna Steyr, a subsidiary of Magna International (NYSE:MGA), through “large undisclosed bank guarantees.” Magna is the contract manufacturer for Fisker.

The short seller states that these guarantees have forced Fisker to issue at-the-market (ATM) offerings, such as the $118 million offering during Q3. More offerings may be on the way in order to stay in business, which would be detrimental to FSR stock shareholders.

Fuzzy Panda Issues FSR Stock Short Report

Fuzzy Panda also claims that Fisker has sought to hide the Chinese origins of its licensed electric vehicle (EV) platform. This draws similarities to Electric Last Mile Solutions, which recently filed for bankruptcy.

The short seller also interviewed former employees of Fisker and Magna, with one of them characterizing Henrik Fisker as a “pathological liar.” Fuzzy Panda provides examples of the CEO’s questionable practices, such as overstating order books, ordering employees to smuggle auto parts and making misleading statements concerning battery advancements.

Fuzzy Panda also states that the Ocean SUV drew inspiration from the design of a Chinese EV, which the company seeks to hide. It reportedly has 80% of the same parts as BAIC’s Arcfox Alpha T, a Chinese EV that was developed on the same platform as the Ocean.

Meanwhile, Fisker has previously stated that it could license the Ocean platform to other original equipment manufacturers (OEMs). Fuzzy Panda brought this up with a former Magna senior executive involved in the Fisker partnership agreement. They responded:

“It is really difficult to understand how it’s possible for Fisker to license it because it was already a licensed platform.”

Fisker promptly issued a press release denying the allegations. The company stated:

“Fisker Inc. does not have a bank guarantee with Magna, and Fisker owns the intellectual property for the Fisker Ocean platform. The Ocean platform does not have 80 percent carryover parts from any other platform.”

Fisker will also take “immediate and aggressive action” to address the claims in the report, although the company did not provide a timetable.

On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Eddie Pan specializes in institutional investments and insider activity. He writes for InvestorPlace’s Today’s Market team, which centers on the latest news involving popular stocks.