Shares of Faraday Future (NASDAQ:FFIE) fell by 62% yesterday, marking the stock’s largest-ever one-day decline. The struggling electric vehicle (EV) company recently made a slew of announcements, although none of them seemed to reassure shareholders. And despite a 37% bump up in price today, FFIE stock is still down about 50% over the past five days.
Faraday seems to be changing up its strategy, as it provided preliminary details concerning its U.S.-China Automotive Industry Bridge Strategy, with more details to be revealed in the upcoming months:
“The Company is expecting to provide additional details adjusting its corporate strategy by returning to the earlier two-brand setup to distinguish market segments. This will enable the integration of FF’s high value “Ultimate AI TechLuxury” solutions and features of its I.A.I technology into vehicles in a more affordable mass market product segments.”
The strategy seeks to capitalize on the strengths of the U.S. automotive market with Chinese automotive companies and their supply chains.
FFIE Stock: Faraday Provides Preliminary Details on Two-Brand Strategy
Faraday has already engaged in preliminary discussions with several global original equipment manufacturers (OEMs) and suppliers about how it can strengthen the automotive relationship between the U.S. and China.
As evidenced by FFIE stock’s significant decline, shareholders aren’t very optimistic about the plan. That’s likely because the Chinese EV market is extremely competitive, much more than compared to the U.S.
Faraday’s 2023 Form-10K, or annual report, didn’t help its case. Revenue tallied in at just $800,000 compared to a net loss of $432 million, which improved from a loss of $602 from 2022, although that isn’t saying much. Faraday’s revenue came from the sale of just four vehicles while leasing out six of them.
Making matters worse, Faraday withdrew its guidance for 2024 after disclosing in November that it planned to assemble 1,000 vehicles in 2024 “subject to availability of requisite capital.”
The company also revealed that it has substantial doubt about its ability to continue as a going concern for the next 12 months due to recurring losses and high cash burn. The company noted that it would need to raise additional capital in order to continue as a going concern. Its cash balance, excluding restricted cash, was $3 million as of May 23.
On the date of publication, Eddie Pan 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.
