Faraday Future Intelligent Electric (NASDAQ:FFIE) stock once had promise. Now it’s a penny stock. Founded 10 years ago in Los Angeles, in 2015 it promised to invest $1 billion in a new factory to take on Tesla (NASDAQ:TSLA) and other industry pioneers.
It promised a new type of battery and showed off a concept race car with a carbon fiber shell.
Had Faraday followed through on its promises, FFIE stock could have been a good investment. It didn’t. Founder Jia Yueting was no Elon Musk. It was saved in 2018 by Evergrande, a Chinese real estate company
A Closer Look at FFIE Stock.
Faraday returned under a former BMW (OTCMKTS:BMWYY) executive, Carston Breitfeld. It managed to come public in 2021, through a Special Purpose Acquisition Company (SPAC), netting $1 billion.
By this time the end should have been obvious. The industry had moved from showing cars, to building cars, to building them in quantity. It was about to become a war of attrition with mass production, at low costs, the only option.
Since the IPO, which saw the stock trade at $4 per share, InvestorPlace writers have watched the money disappear quickly, then slowly. It had already lost 98% of its value by the time I wrote about it in December 2022.
There were excuses. Faraday eventually delivered an EV, the FF 91, last year. It was a 1050 horsepower, $309,000 crossover with 381 miles of range. This came after BYD (OTCMKTS:BYDYY) had already delivered 14,300 Seagulls, at about $12,500 each.
A few months later, longtime insider Matthias Aydt became CEO. This should have been another hint things would not end well. Faraday claimed the fall of its stock was due to “market manipulation.”
There have been a variety of penny stock games played since then. Plans were made to split Faraday brands between the U.S. and China. The stock jumped after Rivian (NASDAQ:RIVN) tied up with Volkswagen (OTCMKTS:VWGAY).
The company had a meeting with representatives from the United Arab Emirates, six months after Abu Dhabi bought 20% of China’s Nio (NYSE:NIO)
Since then, alarm bells have been ringing all over InvestorPlace offices. Investors should stay away, wrote our Larry Ramer. The stock could crash to zero, wrote our Josh Enomoto. Chris MacDonald called FFIE “a ticking time bomb” as it prepared for a reverse stock split.
All these writers have seen this movie before. They know how it ends. Penny stock prices can jump on the slightest pump of hope. They always come back to Earth.
The Bottom Line
Investors are now being told to mark their calendars for July 20. That’s when Faraday holds yet another Investor Day and teases a successor to the FF 91 car. The company plans to hold its annual meeting on July 31.
I humbly suggest you make other plans.
Management wants authorization to issue more stock and have a reverse stock split. It has already had a reverse split this year. The stock hasn’t traded above $1 per share since late May.
Someone may still tell you Faraday Future will go “to the Moon.” It has missed its launch window. You should know when to walk away and know when to run.
On the date of publication, 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) and positions in the securities mentioned in this article.
