Tech

Fisker deal talks with big automaker collapse

Published

1 month ago

March 26, 2024

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Fisker deal talks with big automaker collapse

Cash-strapped Fisker’s talks with a large automaker for a potential deal have collapsed and the New York Stock Exchange plans to delist the electric-vehicle startup’s shares due to “abnormally low” price levels.

The NYSE has also suspended trading in the stock, it said on Monday, hours after it was halted pending an announcement. Fisker’s shares were trading at $0.09 before the halt and closed at $0.13 on Friday.

The termination of talks with the unnamed automaker has led Fisker to search for strategic options including in- or out-of-court restructurings and capital markets transactions, the startup said on Monday.

In the case of a stock delisting, the company will be required to offer to repurchase its unsecured 2.50% convertible notes due 2026 and it will trigger an event of default under its senior secured convertible notes due 2025.

“We do not currently have sufficient cash reserves or financing sources sufficient to satisfy all amounts due under the 2026 Notes or the 2025 Notes, and as a result, such events could have a material adverse effect on our business, results of operations and financial condition,” it said.

The news comes a week after the company paused electric vehicle production, fanning growing uncertainty around its future.

“I can’t put it if it is next week or next year, but it is inevitable,” Thomas Hayes, chairman at hedge fund Great Hill Capital, said on the growing chances of Fisker likely to file for bankruptcy protection.

A potential bankruptcy will make Fisker the second failed auto startup from Henrik Fisker, who started his career as an automotive designer and was also a Tesla consultant.

His previous attempt, Fisker Automotive, fell victim to the 2008 financial crisis and filed for bankruptcy in 2013 despite fetching $192 million in loans from the Department of Energy.

Fisker’s latest venture was founded in 2016 and went public through a merger with a blank-check firm for a valuation of $2.9 billion.

But a slew of supply chain issues, production delays, and fundraising hurdles sent its market valuation crashing to less than $100 million.

Reuters had earlier this month reported that Japanese automaker Nissan was in advanced talks to invest in the startup.

STRUGGLES TO RAISE FUNDS

Fisker said earlier on Monday it will be unable to meet a closing condition related to its attempt to raise up to $150 million by selling convertible notes after missing an interest payment.

The $8.4 million payment for some notes due in 2026 was supposed to be paid on March 15, but the startup said it did not pay despite having enough liquidity as it wanted to use the 30-day grace period to talk to investors about its capital structure.

Raising funds has been hard for loss-making EV startups, which have little by way of revenue as they struggle to ramp up production and deliver to customers amid strong competition and a tough economy.

Separately, Fisker said it would ask investors to vote on a proposal for a reverse stock split at a shareholder meeting on April 24, as it looked to comply with the New York Stock Exchange’s listing norms.

Fisker’s shares have lost more than 90% of their value this year after the startup flagged going-concern risk in February and paused investments in future projects until it secured a partnership.

It pivoted to a dealer-partner model earlier this year, after delivering less than half of the vehicles it made in 2023 due to logistics issues.

Fisker has pursued a different strategy from Tesla and other EV startups by relying on auto supplier Magna to assemble its vehicles rather than invest the capital to build and operate a factory on its own.

The Fisker Ocean competes with Tesla’s Model Y SUV, and a growing crowd of mid-size electric SUVs such as the Ford Mustang Mach-E.

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Tech

Reddit shares soar as earnings show advertising, AI licensing revenue potential

Published

1 day ago

May 8, 2024

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Reddit shares soar as earnings show advertising, AI licensing revenue potential

Reddit soared as much as 11% in early trading on Wednesday after the social media firm floored investors with strong revenue growth and improving profitability in the first earnings since its market debut.

The company surprised Wall Street late on Tuesday with a forecast that it could post an adjusted profit in the second quarter, and its revenue outlook was also far above estimates.

The projections followed better-than-expected results for the first three months of 2024, showing that Reddit’s push to grow its advertising business and content licensing deals with AI-focused companies such as Google were paying off.

“We suspected that Reddit would come out strong out of the gates, and Reddit exceeded our bullish expectations,” Bernstein analyst Mark Shmulik said in a client note.

“Reddit appears to be reaping the benefits of a strong digital ad market, buoyed by some ‘free’ IPO marketing, alongside increased traffic courtesy of their new favorite AI partner Google.”

Several analysts have said that despite being founded in 2005, Reddit was still in the early stages of the process of generating ad revenue and should benefit in the coming quarters from expanded ad targeting and measurement tools, among others.

The company’s more than 100,000 discussion forums, or subreddits, filled with user-generated content topics ranging from history to gaming have made it an attractive partner for companies looking to train their data-hungry AI models.

At least 7 analysts raised their price target on Reddit’s stock, pushing the median view to $55, according to LSEG data. The company priced its much-awaited initial public offering at $34 in March.

Reddit remains in the early days of developing its ads business, Piper Sandler analysts said, adding that a large international user opportunity remains untapped.

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Tech

Kretinsky and Layani face off in battle for distressed IT firm Atos

Published

2 days ago

May 7, 2024

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Kretinsky and Layani face off in battle for distressed IT firm Atos

Shares of Grayscale Bitcoin Trust jumped 2.4% on Monday after the exchange-traded fund (ETF) that tracks the price of bitcoin saw its first day of inflow since January.

The move marks a major milestone for GBTC, which has seen $17.46 billion in withdrawals since it converted from a trust to an easily tradable ETF in January, due to the higher fees it charges compared with rivals.

Some of the outflows were also tied to the wave of bankruptcies in the crypto industry, as companies that collapsed in the last two years pulled money out of the fund to repay their creditors.

GBTC saw inflows of $63 million on Friday, according to investment management firm Farside Investors. It currently manages $18.08 billion in assets, according to its website.

However, its position as the biggest spot bitcoin ETF by assets under management (AUM) has come under threat from BlackRock’s iShares Bitcoin Trust, which manages $16.91 billion, according to its website.

Grayscale said in March that it would seek approval from the Securities and Exchange Commission to spin off a portion of GBTC’s assets into a new, lower-fee Bitcoin Mini Trust. The company has yet to decide on the fees for the Mini Trust.

Spot bitcoin ETFs, which were approved by the SEC in January following a decade of rejection, provide investors with bitcoin exposure without the need to directly hold the cryptocurrency.

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Tech

China to build 100-mile-long hyperloop train line by 2035

Published

2 days ago

May 7, 2024

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China to build 100-mile-long hyperloop train line by 2035

China’s top engineering and rail design experts have exciting news: they’re planning to build the country’s very first hyperloop train line!

This futuristic project will connect two bustling cities, Shanghai and Hangzhou, spanning a distance of 150km (about 93 miles).

What makes this project so special? Well, it’s all about speed! The hyperloop train will travel inside a special vacuum tunnel, allowing it to reach mind-blowing speeds of up to 1,000km/h (that’s about 621mph!).

Before choosing the Shanghai-Hangzhou route, the experts carefully evaluated several options.

They considered factors like economic potential, population density, and existing transport infrastructure. In the end, they decided that connecting Shanghai and Hangzhou would bring the most benefits to the region.

This project is a big deal for China, and it’s being led by some of the country’s top engineers and scientists.

They’re excited about the potential for this hyperloop train to revolutionize transportation and boost economic growth in the area.

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