FFIE : An Undying Phoenix? Don't Bet On It!
$Faraday Future Intelligent Electric Inc.(FFIE)$
Despite a “positive” update from the Nasdaq, about Faraday Future, the stock still closed in the “red” on Fri, 28 Jun 2024,
And the “positive” update was - FFIE announced that it had requested a hearing in front of the Nasdaq Hearings Panel and present its plan for continued listing.
The plan included:
- Filing its delayed Form 10-Q (Quarterly report), for the quarter ended 31 Mar 2024.
- Regaining compliance with Nasdaq’s minimum bid price requirement of $1.00.
- The electric vehicle (EV) company requested a deadline of 30 Aug 2024, to achieve the minimum bid requirement.
Nasdaq panel has responded and accepted FFIE’s request for continued listing on two conditions:
- First, the EV company must file its first-quarter Form 10-Q by 31 Jul 2024.
- Second, it must regain compliance with the minimum bid price requirement by 31 Aug 2024.
Regaining compliance is defined as having a closing bid price of at least $1.00 for at least 10 consecutive trading days.
FFIE : Cleared.
Faraday Future stated that it plans on filing its Q2 2024’s 10-Q on time.
FFIE’s Global CEO Matthias Aydt has said:
- We would like to thank the Nasdaq Hearings Panel for this decision as it is a positive step in the right direction for FF to regain full compliance.
- FFIE plan to continue on this trajectory of committing to completing additional requirements in the coming weeks.
To regain the $1.00 level, FF has proposed a reverse stock split either between (a) 1-for-2 or (b) 1-for-40 at its upcoming annual meeting of stockholders in July.
The date for the meeting has not yet been provided.
The reverse split will unlikely be option (a) [1-for-2 split] as FFIE stated that it would like to have a stock price of at least $5 post-reverse split.
Based on the current price of around $0.50, a 1-for-10 reverse split would do the trick.
UAE Partner.
Faraday recently also announced that it had hosted United Arab Emirates (UAE) investment firm Master Investment Group (MIG) and its CEO, Sheikh Abdullah Al Qassimi, for a strategic meeting.
Faraday Future founder YT Jia, CEO Matthias Aydt and other Faraday team members attended the meeting.
Afterwards, the company described the meeting as a “pivotal moment”.
On LinkedIn, MIG CEO Al Qassimi posted, “It was a pleasure to engage in a strategic meeting with such a esteemed leader in the industry. A new chapter to be started!”
There is speculation that MIG is considering an investment in the struggling EV company.
There might be some truth in the speculation for FFIE has previously stated that it was in the process of seeking strategic financing in the Middle East.
However, a lack of available authorized shares presented a roadblock toward this effort.
Workaround.
To fix this, the company has proposed increasing its authorized common stock by a staggering 800%.
Mathematically, it means increasing its share from 463.31 million to 4.16 billion.
At the same time, It also wants to increase “authorized preferred” stock by an equally staggering 783%, from 473.31 million shares to 4.17 billion shares.
Both of these measures are included in one proposal and will be voted on at Faraday’s upcoming annual meeting of stockholders.
The meeting has been scheduled for sometime in July 2024, although a definitive date hasn’t been provided yet.
If the measure is approved, shareholders will likely experience significant dilution, as their ownership percentage of FFIE stock will fall if shares outstanding increases.
At the same time, the company is desperately in need of capital in order to continue its operations.
My viewpoints: (mine only)
Do you find contradictions in the initiatives to be undertaken by FFIE?
Do you see the red flags scattered all over the place?
In the first place, FFIE ended up in such precarious circumstances is because the C-suite did not perform their duties responsibly. No penalties meted for failure to deliver ? [Red flag #1]
FFIE went public on 22 Jul 2021, in a deal with New York-based SPAC company Property Solutions Acquisitions Corp.
In its 3 years of operations, FFIE has:
- Delivered a grand total of 10 EVs and resumed production on 12 Jun 2024, after a 4 month hiatus. [Red flag #2]
- Undergone 2 reverse stock-splits on (a) 28 Aug 2023 (1-for-80) and (b) 01 Mar 2024 (1-for-3). [Red flag #3]
In its quest to remain listed, FFIE is going for another reverse stock split this July (see above). [Red flag #4]
After having undergone 2 reverse stock splits, what are the odds that the impending one will be a successful?
With $5 million left in its coffer, how many months can the EV maker operate before delaring bankruptcy? [Red flag #5].
The final nail to the coffin is that FFIE is looking to enlarge its “authorized preferred” stocks by a whooping +783% so that they could offload the extra new shares for UAE investment firm buy-in? [Red flag #6]
All these efforts to be expended jumping through numerous loops instead of focusing its effort to do a honest job of scaling up EV production and deliver it to customers? [Red flag #7]
I don’t know about the phoenix rising out of the flame again, but I am getting the hell out of FFIE, pronto ! And not a minute too soon.
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Do you think FFIE will continue to fall this week?