Fisker Inc. stock jumped more than 20% on Wednesday as Wall Street viewed the deal with electronics heavyweight Foxconn Technology Group as a step toward diversifying the electric-vehicle maker’s production and its strategy of becoming the “Apple” of autos.
shares were on pace for their biggest gains in nearly two weeks. The shares have more than doubled from the October initial public offering, and have gained 28% in the past three months, compared with an advance of around 8% for the S&P 500 index
in the same period.
The two companies have signed a memorandum of understanding to make more than 250,000 vehicles a year, with Fisker Chief Executive Henrik Fisker saying that the location could be the U.S.
Taiwan-based contract manufacturer Foxconn is better known as the Apple Inc.
iPhone maker, but it also makes a plethora of other noteworthy electronics. Last year it announced an expansion that included working with EV companies and in January entered a joint venture with Chinese auto maker Geely, which sells Volvo vehicles and other brands.
For Fisker, the deal with Foxconn diversifies its manufacturing away from relying only on Magna International Inc.
said Jeffrey Osborne, an analyst at Cowen.
It also “exemplifies Fisker’s goal of becoming the ‘Apple’ of auto, with a focus on design and everything the consumer can see and touch relative to the power train development, by literally going directly to the manufacturer of the iPhone,” he said.
The deal would help Fisker achieve its goal to have four vehicles in production by 2025, three with Magna and one with Foxconn, Osborne said.
Earlier this month Morgan Stanley started coverage of Fisker shares with the equivalent of a buy rating, saying the company stands out “as one of the more de-risked and strategically underpinned business models” and that investors may be underestimating the deal with Magna.
Fisker went public via a SPAC merger after an earlier life as privately held Fisker Automotive, which went bankrupt in 2013 after six years in business. CEO Erik Fisker is best known for designing luxury vehicles for companies such as Ford Motor Co.