Troubled electric vehicle (EV) maker Faraday Future (NASDAQ:FFIE) stock rose 10% over the weekend despite announcing a production delay.
The company said it has completed crash tests on its FF 91 sedan and will begin production tomorrow, Aug. 1, in China.
Faraday had hoped to start production in the second quarter. The latest delay was blamed on “time constraints from a supplier” and required safety testing.
Faraday Future stock opened this morning, July 31, at 28 cents per share, a market capitalization of about $400 million.
Does Faraday Have a Future?
Faraday has been struggling to secure capital for years. Each claim of new funding sends the stock up. Then production is delayed, and it goes back down.
In June, it announced a $300 million capital raise along with a reverse stock split. The reverse split aims to get the stock price above $1 and maintain its listing. Faraday was first warned of non-compliance with listing requirements in January. The formal notice was delivered in May.
Faraday Future was founded as an American company in 2014 by Chinese immigrant Jia Yueting, who filed for personal bankruptcy in 2019. Since then, it has become a Chinese company, claiming strategic partnerships with Geely Automotive (OTCMKTS:GELYF) and Foxconn Technology (OTCMKTS:HNHPF). Last year it claimed it had $350 million in new financing to start production.
While current CEO Xuefeng Chen, known as “Chris,” has experience in car production, Faraday’s failure to deliver has made it a penny stock. Shares last traded at over $1 last September.
An accounting problem leading to the replacement of CFO Yun Han didn’t help with investor confidence.
FFIE Stock: What Happens Next?
FFIE stock is still down 86% compared to one year ago and 67% in the last six months.
It’s very late in the day for a new electric car company to start production. I doubt Faraday survives and think long-term investors should stay away.
As of this writing, Dana Blankenhorn 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.
