Investing in stocks of electric vehicle makers is akin to taking roller-coaster rides these days. Just look at their stock price charts.
With a share price well lower than 10 cents, $Faraday Future Intelligent Electric Inc.(FFIE)$ is at risk of being delisted if it fails to maintain a minimum bid price requirement of $1 and has in fact received a warning by the Nasdaq to do so by 25 June. With a turnaround strategy to achieve profitability and defend shareholder values that seems to be empty talk for lack of a compelling plan, I'm highly doubtful that its stock price would recover exponentially within the next 2 months to comply with Nasdaq's listing rules. Hence, I believe that it will just be a matter of when rather than if the stock will be delisted.
Its peer $Rivian Automotive, Inc.(RIVN)$ is in not much better shape either with its disappointing business outlook. With a concentration risk given its narrow customer base, as the EV maker is heavily reliant on its investor and sponsor Amazon which unfortunately has fallen short of its orders in its bid to electrify its delivery fleet. The EV startup has so far not yet been able to generate sufficient operating cash flows, so that the EV maker has been continually dipping into its cash reserves to sustain operations. However, it is projected that Rivian has only sufficient cash to see its operations through another couple of years, so that the EV maker is under immense pressure to achieve profitability sooner than later.
A patchy economic recovery in China and looming deflation has led to softening domestic demands for new electric vehicles, while prevailing price wars among the EV makers to grab and defend market share has only led to an industry-wide shrinking gross margin, that has weighed on the stock prices of the Chinese EV trio $NIO Inc.(NIO)$ , $XPeng Inc.(XPEV)$ and $Li Auto(LI)$ . Adding to their sorrows is a growing number of conventional car makers jumping onto the EV bandwagon, resulting in abundant choices and excess supply in the market. Until the trio find enough buyers to sustain growth, the weak demands will continue to weigh on their stock prices.
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