By Eliot Brown
In 2020, electric-vehicle maker Fisker told investors it would launch its first car in two years and have $10.4 billion in revenue in 2024. That would would have made it the fastest-growing company in U.S. history.
Its projections were off: Fisker filed for bankruptcy on Monday; after profitably churning out a brand new line of EVs proved harder than expected. It finished 2023 with $273 million in revenue and a net loss of $939 million.
The tumble toward insolvency follows the frenzied stock market of late-2020 and 2021, when investors flooded into hyped areas such as electric-vehicle startups and special-purpose acquisition companies.
Three EV startups that went public through SPAC mergers at the time Fisker, Arrival and Faraday Futureeach told investors that they would hit at least $10 billion in revenue in 2024.
Arrival filed for the U.K.s version of bankruptcy in February. Faraday Future had $4 million in cash at the end of 2023 and has warned investors it may not last through the year.
Their revenue projections were particularly notable, given that none had revenue at the time. For context, Google took eight years to hit $10 billion in sales, the fastest growth ever for U.S. startup.
They also highlight one of the features that fueled the SPAC boom. While regulations around traditional initial public offerings discourage companies from including projections or specific predictions about the future, SPACs didnt have such rules. Billions of dollars of funding poured into companies based in part on projections that didn't come to bear.
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(END) Dow Jones Newswires
June 18, 2024 11:44 ET (15:44 GMT)
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