The clock is ticking for Faraday Future Intelligent Electric (NASDAQ:FFIE). The upscale electric vehicle manufacturer faces several important deadlines in the weeks ahead.
It has to get all of its Securities & Exchange Commission (SEC) filings submitted by July 31 to come into compliance with Nasdaq listing requirements. And then it has to boost its share price above $1 for 10 consecutive days by Aug. 31. Otherwise, Faraday Future stock will be booted to the pink sheets.
Even if Faraday Future is successful, which, given recent comments by CEO Matthias Aydt, it seems it will be, that’s not the only hurdle confronting the EV maker. The company is in desperate need of money to survive.
To achieve that, the EV stock is tearing pages out of the playbook used by Lucid Group (NASDAQ:LCID) and Rivian Automotive (NASDAQ:RIVN) . If FFIE is succesful, it means not only will Faraday Future live but arguably could even grow.
If that’s the case, should investors buy Faraday Future stock now on the chance for a rebound? Let’s find out.
The Countdown Begins
The luxury EV car company has until the end of the month to get all its late quarterly reports in order. According to comments made at an all-hands meeting of Faraday Future employees, CEO Aydt indicated the company will get it done. It will then need to file its second-quarter report in a timely fashion soon after.
The next hurdle is getting approval for the reverse stock split at Faraday Future’s annual shareholder meeting. If investors approve the measure and the board of directors signs off, the EV maker will merge its outstanding shares into a smaller number, which will have the effect of raising the stock price.
This is not the first time Faraday Future stock was the subject of a reverse split. It effected a 1-for-80 split just last year. While it spared the company a delisting at the time, the long-term benefit was obviously fleeting as it needs to perform another one now.
Assuming the new split boosts the stock high enough that it can stay about the $1 per share threshold for 10 days, Faraday Future stock will live to fight another day — until it needs to do the next reverse split.
That’s why the EV maker has a Plan B and apparently a Plan C ready to go.
Following Rivian’s Lead
Faraday Future recently laid out its two-home-market/two-brand plan. It will allow Chinese electric vehicles into the U.S. to be built at Faraday Future’s California factory and let Faraday put the technology going into its luxury FF91 EV into more mass-market vehicles. That’s a page from the Rivian playbook
Rivian wants to take its proprietary advanced electronic control units (ECUs) and software that is used in its own vehicles and sell it to other automakers. Because cars are essentially rolling computers, they require dozens of (or sometimes even more than 100) ECUs to operate a vehicle. Rivian’s technology consolidates that amount, making the vehicles more cost-effective.
If Faraday Future can similarly sell its technology to other auto manufacturers, it can have a secondary stream of revenue.
But it’s the page from Lucid’s playbook that could be the one that allows Faraday Future to survive.
Stealing Ideas From Lucid
The high-end automaker is looking for an investment from the United Arab Emirates to fund development of an electric auto industry from the ground up using Faraday Future vehicles. Lucid is doing a similar thing where it ships EV parts to Saudi Arabia for assembly. The Saudi’s sovereign wealth fund has injected billions of dollars into Lucid and it is what keeps the EV maker afloat.
If Faraday Future can do that in the UAE, it may survive. It still needs to figure out how to sell EVs elsewhere. Only sold four of its FF91 EVs last year.
Aydt says he has been traveling to the UAE so often lately he has become a Platinum air miles member. But if he can attract billions of dollars in investments as the country tries to pivot away from oil, Faraday Future stock could grow.
The Bottom Line
Unfortunately, these are not the plans of a thriving company. None of them might come to fruition. Heck, Faraday might not even make its filing deadline, or its artificially inflated stock could immediately collapse.
There is a formation of some hope that Faraday Future stock might survive. But that is no basis for an investment. Investors should stay on the sidelines and avoid the EV maker at all costs.
On the date of publication, Rich Duprey 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
