Fisker stock alert: EV startup fails to repay $3.5 million loan

One of the most beaten electric vehicle (EV) stocks on the market just can’t seem to get going. Fisherman (OTCQB:FSRN) has lost almost all of its value over the past six months. Even after several random price increases that shocked investors, Fisker stock is still down more than 96% over the past two quarters.

Today, however, the microcap penny stock is back in the black, even as the company reports more bad news. Fisker defaulted on a $3.5 million short-term loan it took out last month. While this hasn’t pushed shares down, it’s still a worrying development for a company that already has plenty of downside to it.

What happens to Fisker shares?

Why would a company rise in value on news that it defaulted on a loan? In Fisker’s case, this is likely due to the same phenomenon that sent shares soaring a few months ago when Fisker’s stock soared on news of new dealer partners. These quick retail trading frenzy can help even unstable companies to rebound quickly. But they can also run out of steam just as quickly, wiping out the stock’s gains.

Fisker disclosed in a recent filing with regulators that it had defaulted on a $3.456 million senior secured note, according to the holder. Market observation Reports:

“The investor is exercising its right to immediately repay the entire outstanding amount at a fixed repayment rate, including interest and other fees, Fisker said. The reasons for the default were the expiration of the company’s forbearance agreement with lenders and the failure to make payments due under the short-term contract and previous debt agreements.”

This comes after the bad news for Fisker has been piling up for weeks. Last week, the company announced another wave of layoffs after already cutting several jobs in 2024. Fisker also saw a significant drop in institutional investment, and Wall Street lost confidence in FSRN stock. In addition, the automaker recently scaled back its direct sales and acknowledged production setbacks. And that’s just the May 2024 recap.

Why it is important

At this point, investors should know better than to get their hopes up when Fisker stock experiences a random spike. The fact that the company failed to repay a short-term loan should remind everyone that shares are in a clear race to the bottom. The only thing that could possibly save Fisker is if it could find a buyer to take over, but with each passing day, that seems less and less likely. This news of the default is just the latest in a long line of reasons to avoid Fisker as it heads toward bankruptcy and destruction.

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At the time of publication, Samuel O’Brient 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 author and are subject to InvestorPlace.com’s disclosure policies.