To The Moon

Faraday Future continues to fly 6% higher in premarket trading on Thursday.

Faraday Future stock is up 32% on Wednesday. FFIE seems to have risen upon no news, simply a change in sentiment about the future prospects. There is a video doing the rounds and that could be the trigger: “Faraday Future didn’t bring out any new financial information that might have offered some insight. Nor did it introduce any new technical developments. It did, however, offer up a video that featured Jason Oppenheim—real estate broker and reality TV personality, among other things—taking delivery of an FF 91 2.0 Futurist Alliance. Oppenheim will also be part of the “Futurist Spire Club Salon,” reports note, which is basically just a group of early Faraday Future buyers.” That is, we would say, probably pretty weak beer to base a 40% rise in a stock price upon.

As we’ve said before about Faraday Future: “Faraday Future Intelligent Electric (NASDAQ: FFIE) stock will rise some 8,000% this morning.” that was about the reverse stock split. But the stock price has then declined at least another 50% since then. A pure and theoretical ex-stock split price would be more like $12.80.

We also run with this part of our analysis: “It’s what comes next that matters. For Faraday needs more capital - that’s the reason to be on NASDAQ, recall - and it’s pretty obvious that they’re going to do a new share issue to get it. The company just authorised a further 300 million issue. That probably won’t happen in one fell swoop but it is going to be dilutive. Thus the recent - and likely future - weakness in the FFIE stock price. Today’s move is purely nominal and technical. But what comes next won’t be.” 

None of this is aided by the company’s complaints about short sellers. “The electric vehicle maker is also looking to protect itself. FFIE management said it has recently observed a series of suspicious activities that it believes suggest a coordinated effort to undermine valuation by spreading misinformation and manipulating market sentiment. To address the issue, Faraday Future (FFIE) plans to further investigate and address any perceived market manipulation or misinformation activities.” That’s simply not a good sign when management blames the outside world for a falling share price. Hey, it might even be true in the occasional instance but more often than not it’s management performance causing the issue.

Given that this stock price jump seems to be driven by that video - a pretty small real world influence - we’d expect this price bubble to deflate soon enough.