Fisker (NYSE:FSR) plans to start producing its Ocean SUV model this year, which should prove to be positive news for the electric vehicle maker. However, a few key challenges remain and FSR stock has dropped more than 30% so far in 2022. This has many wondering if Fisker is still a hot play on electric vehicles (EVs) or one to avoid.

With that question in mind, let’s take a look at what the road to success for Fisker will entail. (Hint, it might be electric, but it’ll also be very bumpy).

Is FSR Stock Running Out of Energy?

In my previous two articles on Fisker stock, I was not too bullish on it.

I argued that “[w]e do not yet have a history of key financial metrics, revenue, gross margin, cash flows … investors … [should] wait and see important data from the future earnings reports before deciding to buy the stock.”  I also argued that whether or not you should by FSR stock “all comes down to what type of investor you are. If you are an investor that digs down to fundamentals, valuation and cold-but-real numbers, you will probably pass on Fisker. If you are a speculator and prefer a risky bet … then you may think FSR stock is a bargain.”

I still stand by these statements.

But now things are, perhaps, getting a bit more interesting. Fisker stock had its fair share of rallies and selloffs in 2021. Now, in 2022, it has declined as the EV market frenzy has lost momentum and considerable concerns about rising interest rates hinder markets more broadly.

Fisker will announce the fourth quarter and full-year 2021 financial results on February 16, 2022, which means investors will start asking plenty of questions heading into the report.

With the latest earnings report looming and investor sentiment souring, these are some of the questions I would ask if I was looking into buying FSR stock in 2022.

Key Questions for the Fisker Management Team

• Fisker Ocean One will be a limited production of 5,000 units at a price tag of $69,000. How many reserves are for this trim level? What are the latest reservations numbers?
• Why did sales dip in Q3 2021 to $15,000 compared to $27,000 in Q2 2021? As production gets closer, sales in the form of reservations should increase. Are there any cancellations?
• SG&A expense surged in Q3 2021. Research and Development costs rose significantly too. How will Fisker deliver strong profit margins if these costs increase further?
• Why did management choose back in 2021 to issue Green convertible notes rather than just choose a stock offering? After all, shareholders have been diluted in the past year, with total shares outstanding growing by 7%.
• Do you plan to invest in other green projects?
• What are your projections about any supply chains problems? How do you plan to handle them?
• Are your production targets of 7,500 units per month by late 2023, and over 10,000 per month during 2024 realistic?
• What impact do you anticipate Project Pear will have on Ocean model sales, as it will be a more affordable electric vehicle?
• When do you estimate to reach break-even sales and turn profitable?
• Do you plan to sell the Ocean model worldwide? If yes, what are your core markets?

Bottom Line on FSR Stock

Fisker will update investors in mid-February 2022 with full-year financial results. At the end of the day, I still consider its $11.53 price tag (as of Feb. 4) to be expensive. That’s based on its valuation and a lack of free cash flow. And remember, I think it’s an expensive price tag regardless of the selloff in Fisker stock this year.

As such, I don’t think now is the time to get excited about FSR stock. Fisker states it has a direct-to-consumer operating model that will support recurring revenue. More importantly, it claims to have a rapid path to both production and profitability. Revenue results for Q4 2021 will be a big disappointment unless there’s a significant increase. FSR investors should also monitor any rising costs, which should increase as the company strives to perfect the Ocean before launching it.

Sure, Fisker stock could gain momentum again with positive surprises on reservations. But in the absence of confirmed data, the current bull case is purely speculative and unsustainable.

On the date of publication, Stavros Georgiadis, CFA  did not have (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.

Stavros Georgiadis is a CFA charter holder, an Equity Research Analyst, and an Economist. He focuses on U.S. stocks and has his own stock market blog at thestockmarketontheinternet.com/. He has written in the past various articles for other publications and can be reached on Twitter and on LinkedIn.