Fisker Inc (NYSE:FSR), the electric vehicle company, sunk by 40% in the aftermarket as reports revealed it had hired advisors to prepare a bankruptcy filing.
FTI Consulting, the financial advisor, and law firm Davis Polk were hired by the embattled start-up to draft a potential filing.
It comes after Fisker recently warned investors it could run out of cash by the end of the year, with its most recent financial report revealing debts of over US$1 billion against full-year sales of US$273 million.
Last month, Fisker said it spoke with investors about raising additional funds and opened talks with new potential manufacturing partners in the US.
However, the group still warned that there was “substantial doubt” surrounding its ability to remain in operation.
In February, the company postponed the release of last year’s financial report after it failed to hire enough accountants.
It’s not only Fisker which is suffering with issues, multiple EV companies have struggled with a downturn in demand, with Elon Musk’s market leader Tesla having suffered complications recently.
Earlier this week, shares in the company dropped more than 4% after analysts labelled it a “growth company with no growth”.
Musk’s electric vehicle business saw its stock rating downgraded to the equivalent of a “sell” rating by Wells Fargo, leading to it shedding more than £11 billion in market value and taking the share price to the lowest point since May.