Faraday Future Intelligent Electric (NASDAQ:FFIE) stock doesn’t seem to be headed for another short squeeze. Earlier this month, shares of the electric vehicle (EV) producer suddenly began to surge during the “Roaring Kitty rally” ignited by meme stock investor Keith Gill. FFIE stock enjoyed more impressive gains than popular favorites such as GameStop (NYSE:GME) and AMC Entertainment (NYSE:AMC).
Now, though, the trading frenzy has cooled off and Faraday’s Future is back to looking questionable. Short interest for the stock has fallen significantly since then, suggesting that we aren’t likely to see this microcap penny stock surge back to its previous levels.
What’s Happening With FFIE Stock?
Since last month’s short squeeze took FFIE stock to a close as high as $1.80 per share, Faraday has been gradually bleeding value and sinking back to its earlier prices. As of this writing, FFIE is back in the red and hovering around 52 cents. After a volatile week of mostly trending downward, Faraday’s prospects aren’t looking good, especially for those hoping for another squeeze.
Let’s break down how bad things are for this stock. Data from Fintel shows that 2.75% of FFIE stock’s float is being sold short. That figure was 95% back on May 22. For short interest to fall that sharply suggests that short sellers are likely covering their positions. Likewise, the cost to borrow fee for Faraday is currently at 11%. That figure is still fairly high, but it isn’t considered extreme. On Fintel, FFIE currently boasts a short squeeze score of only 53.58 out of 100, suggesting another short squeeze isn’t likely.
So, should investors bet on FFIE stock again? The company currently has plenty of strikes against it. Indeed, Faraday is dealing with the ongoing threat of losing its spot on the Nasdaq. Last week, the company withdrew its production outlook after a disappointing earnings report. But its financial problems will also likely make investors nervous. As InvestorPlace contributor Josh Enomoto reports:
“In a Form 10-K disclosure, the company issued a going concern risk. Further, management may move to seek bankruptcy protection unless it’s able to secure new funding. Another major eyesore for the EV maker is that it failed to timely file its Form 10-Q for the first quarter of this year. That only adds to the delisting risks tied to Faraday Future stock.”
The Bottom Line
At the end of the day, it’s hard to be optimistic about Faraday and FFIE stock making a real comeback. That’s because the company never actually made a comeback to begin with. It benefitted from retail investor interest and heavy short squeeze speculation.
But as is often the case with meme stocks, no short squeeze is returning. Numbers don’t lie and, in the case of FFIE stock, they speak volumes. This struggling penny stock didn’t have much going for it prior to the Roaring Kitty rally. Now that the dust is settling, it’s clear investors are moving on and turning their attention toward stronger EV producers.
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Read More: Penny Stocks — How to Profit Without Getting Scammed
On the date of publication, Samuel O’Brient 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.
