Today has not been easy for traders and investors. Neither has this year. The S&P 500 has hit new 2022 lows, as has Faraday Future (NASDAQ:FFIE). However, as the market tries to bounce, FFIE stock is tumbling even lower.
FFIE stock is down about 20% so far today and carving out session lows as we speak. In fact, not only is it at session lows, but new all-time lows as well.
It has not been a good stretch, to say the least. Shares are down a whopping 93% from the July high as well as 95% from the 52-week high. Faraday is not hitting new lows by accident, however.
This morning, the company filed a new Form 8K with the U.S. Securities and Exchange Commission (SEC). Specifically, “the company entered into an exchange agreement with a number of entities affiliated with New York-based venture capital firm ATW Partners and ‘holders of certain existing convertible promissory notes of the company.'” As reported by Seeking Alpha, these notes were “issued between June and August 2021.”
What to Do With FFIE Stock Now?
Too many investors have gotten too caught up in the rising electric vehicle (EV) trade. Buying leading EV builder Tesla (NASDAQ:TSLA) is one thing. So is buying Ford (NYSE:F), which is profitable and electrifying some of the most popular vehicles in the United States. Even buying new EV players like Lucid (NASDAQ:LCID) or Nio (NYSE:NIO) can be reasonable, albeit a bit more speculative.
In my opinion, though, too many investors have chased too many EV stocks in hopes of landing the next Tesla. Investors must remember that the auto industry is incredibly difficult and many of these companies even go bankrupt. I’m not saying that’s necessarily in the future for Faraday and FFIE stock. Still, the prospects don’t look too rosy at the moment.
According to the International Monetary Fund, the outlook for the economy is pretty grim in 2023. Combine a likely recession, a bear market in equities and the fact that Faraday has no revenue and things look even worse for FFIE.
As of last quarter, Faraday did have almost 400 preorders. However, the company expects to continually generate “significant operating losses for the foreseeable future,” taking on expenses before it can make “meaningful revenue.”
At this point, I don’t know what to make of FFIE stock. Maybe it can end up being the next big thing. But I wouldn’t bet on it anytime soon.
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On the date of publication, Bret Kenwell did not hold (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.
