Faraday Future (NASDAQ:FFIE) pioneered the Ultimate AI TechLuxury ultra spire market in the intelligent EV era, disrupting traditional ultraluxury brands like Ferrari and Maybach. Faraday Future stock positions itself as a software-driven intelligent internet firm.
Faraday Future is committed to advancing EV technology for global user needs. A recent surge in the company’s share price, tied to an apparent short squeeze, has led to major returns for speculators over the past month.
I think investors must be cautious as recent price movements look a bit too intense. Here’s why I’m very skeptical on this name right now.
Production Numbers and Faraday Future Stock
In recent news, Faraday Future announced the withdrawal of their 2024 production forecasts of producing 1,000 vehicles in 2024. According to management, they had to withdrew the forecast because of bad market conditions and low funds. Share dropped 11% after the announcement.
Faraday is now seeking strategic investors and financing backed by equipment and intellectual property to reduce reliance on dilutive funding.
EV firms faced slowing demand as buyers preferred cheaper hybrid vehicles over battery-powered ones amid high interest rates and rising inflation.
In February, Faraday planned a reverse stock split, its second in five months, after cash and supply-chain problems wiped out nearly 99% of its value last year. Despite this, Faraday’s shares have risen almost 70% this year, with its stock price now over $1.
Letter from Nasdaq
At the end of December 2023, Faraday announced it received a Nasdaq letter stating FFIE stock had closed below $1 per share for 30 consecutive business days, failing the $1 minimum bid price requirement. Faraday has until June 25, 2024, to regain compliance by trading above $1 for 10 consecutive days.
On April 24, Nasdaq’s Listing Qualifications Department issued a delisting determination after the stock closed at 10 cents or less for 10 consecutive days. Faraday planned to appeal and address deficiencies, including filing its delayed 2023 10-K.
Faraday Future announced that Nasdaq notified them on May 21, 2024, about the potential delisting due to the delayed filing of their quarterly report.
The company has requested a hearing to present plans for submitting the report and addressing stock price issues. Faraday Future stock should continue trading normally during the hearing process.
Recent Earnings Report
In fiscal 2023, Faraday Future reported its first revenue year and reduced both operating loss and cash used in operations compared to 2022. This was achieved through major cost reductions. The company reported $0.8 million in revenue and $43 million in COGS, reflecting the start of vehicle deliveries in Q3 2023.
Operating loss decreased to $286 million from $437 million in 2022, mainly due to reduced R&D expenses. Net loss improved to $432 million from $602 million in 2022.
FFIE Stock Remains a Sell In My Book
Faraday Future’s stock might see an upswing because of its high short interest at 31.45% of its float, which might pressure short sellers to exit, thus boosting the stock. However, the short ratio is only 0.22 days, allowing bears to exit quickly, limiting bullish impact.
With declining EV market demand and Faraday’s high vehicle prices over $300,000, the company faces significant challenges. This isn’t a stock to speculate on right now, at least in my view.
On the date of publication, Chris MacDonald 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.
