To The Moon

🌟🌟🌟On a day when the markets are up, there is not much cheer for Meme stocks $Faraday Future Intelligent Electric Inc.(FFIE)$  $AMC Entertainment(AMC)$ .

Faraday Future share price is down 8.3% today and a huge 20% for the week.  Faraday Future has now dropped by a massive 86% year todate and 99% in 2023.

Faraday Future has just avoided getting evicted from its Los Angeles headquarters for the time being.  It has reached an agreement with its landlord Rexford Industrial to stay in the building as long as it meets a few conditions.  If Faraday does not fulfil any of the conditions, Rexford Industrial has the right to trigger a 48 hour demand payment and evict Faraday if the latter does not pay up. 

Faraday reported having just USD 8.5 million in cash as of September 2023.  That is the most recent figure as Faraday is late in submitting its annual financial report for 2023 because it has put off payments to its external audit consultants according to an April 2 regulatory filing. 

Faraday has been given a deadline of June 24 2024 for its share price to meet the USD 1. 00 per share minimum for a minimum of 10 consecutive trading days by Nasdaq.  This is a prerequisite to be listed in Nasdaq. 

Since then Faraday Future has effected a 1 for 3 reverse split of its stock on March 1 2024.  This is the 2nd reverse stock split in 5 months.

Faraday Future has also issued its first recall in March 2024, covering all 11 vehicles it built in 2023.  The recall centres around a problem with the warning light for the airbags in Faraday Future 's FF91 SUV.   So far Faraday Future' s customers have been celebrities like Jason Oppenheimer and singer Chris Brown. 

At USD 309,000 selling price, the FF91 SUV is too expensive except for the rich customers.  Faraday Future desperately needs cash injection to survive.  So far there have been no takers yet.

In other news, AMC is up just 0.30% today but has dropped 19% for the week.   AMC is now down 50% year todate and in 2023, AMC has plummeted by 92%.

AMC announced a stock sale to raise USD 250 million on March 28.  It said the money was needed in part to make up for a weaker 1st quarter box office because of last year's strikes by Hollywood writers and actors. 

Last year AMC held 2 other stock sales and a reverse stock split in order to raise cash.  Shareholders are unhappy as stock sales cause dilution of AMC's share price.

Since then, AMC's share price has been sliding downwards and hit an all time low of USD 2.94 recently.

Both Faraday Future and AMC are popular with short sellers who are betting on their continued downward trend.  The risk for these short sellers is a Short Squeeze. 

For those who are new to investing, a Short Squeeze is a situation in which the price of a stock rises to such an extent that investors who have sold short, have to purchase the stock in order to limit their losses, causing the price to rise further. 

There are also contrarian investors who try to anticipate a short squeeze and buy stocks that demonstrate  a strong short interest.  Both short sellers and contrarian investors are making risky moves. 

Investing in Faraday Future and AMC are definitely not for risk adverse investors like me.  I prefer to invest in quality stocks like $Microsoft(MSFT)$  and $NVIDIA Corp(NVDA)$  which have a wide moat, solid fundamentals that will allow them to grow exponentially in the future.

There is no right or wrong in investing, just what suits each person's goals and risk appetite.  For me investing is a slow and steady process where patience and time in the market are more important than making quick profits.

As Warren Buffett likes to say Buy Wonderful Companies at Fair Price and his favourite holding period is forever. 

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