On June 25th, FFIE announced that the company submitted a proposal for a reverse stock split (i.e. consolidation) with a ratio of up to 40:1. Last December, FFIE received a non-compliance notice from Nasdaq as its stock price was below the minimum closing price requirement for 30 consecutive trading days. Prior to this, FFIE had used reverse stock splits to increase its stock price multiple times.
Caixin reported on June 25th that FFIE is "racking its brains" to stay listed on Nasdaq.$Faraday Future Intelligent Electric Inc. (FFIE.US)$Please use your Futubull account to access the feature.
On June 25th, FFIE announced that the company had submitted a proposal for a reverse stock split (i.e. stock merger) with a ratio of up to 40:1. The proposed reverse stock split aims to increase the market price of the company's common stock in order to reduce the risk of delisting from Nasdaq's capital markets. However, if the stock price reaches long-term compliance levels naturally, the company may choose to postpone or not implement the reverse stock split.
The so-called 'reverse stock split' refers to the reduction of the number of shares in circulation by at least a certain amount, without changing the proportion of shares held by shareholders and without causing losses to shareholders. This practice usually only occurs when the stock price is low. The size of the ratio is mainly determined by the current stock price.
It is understood that FFIE received a notice of non-compliance from Nasdaq because the company's stock price had been below the minimum closing price requirement for 30 consecutive trading days in December of last year. Subsequently, the company received a new notice of non-compliance and a delisting notice letter because it was unable to submit its 2023 fiscal year annual financial report 10-K file on time, and its stock price was continuously below $0.1 for ten consecutive trading days.
Currently, FFIE has taken a series of measures to regain compliance, including submitting its 2023 fiscal year annual financial report 10-K file at the end of May, hiring a new independent auditing firm, submitting a preliminary proxy statement including the proposal for a reverse stock split, and committing to submit its Q1 financial report 10-Q file before the end of July. In addition, the company plans to submit its Q2 10-Q financial report on time.
"If the company regains compliance in its public filings, then its current non-compliance with Nasdaq will mainly be due to its low stock price." according to analysts familiar with the U.S. capital markets. It is reported that FFIE has requested that Nasdaq extend the deadline for stock price compliance to August 30, 2024, and has informed Nasdaq's hearing panel that the company's goal is to achieve a post-reverse stock split stock price of at least $5 per share.
"This reverse stock split will not affect the ownership or voting rights of shareholders. The completion of the reverse stock split depends on market conditions and shareholder approval," said FFIE. If the reverse stock split is no longer in the best interests of the company or shareholders, the board of directors can choose not to proceed with the reverse stock split.
Prior to this, FFIE had used reverse stock splits to increase their stock prices several times. In October 2022, FFIE shareholders approved a reverse equity split plan with ratios ranging from 2:1 to 10:1; on August 17th of last year, FFIE shareholders approved a reverse equity split plan with ratios ranging from 2:1 to 90:1; on February 5th of this year, FFIE shareholders once again approved a reverse stock split with a ratio of 3:1.
However, due to the lack of performance support, the three reverse equity splits mentioned above did not have a significant impact on FFIE's stock price. According to the 2023 annual report, FFIE's full-year revenue was only $800,000, but the net loss was as high as $432 million. As of May 23rd of this year, FFIE's cash balance was only $5 million, including $2 million in restricted funds.
In the financial report, FFIE stated that even though Faraday Future had started delivering the FF 91, the demand for the vehicle and related services was low. In addition, the company may continue to suffer huge losses due to the pressure of vehicle service and warranty costs, increased market competition, the deterioration of the macroeconomic environment, changes in regulatory environment, and other risk factors, resulting in the possibility that FF may never be able to achieve or maintain profitability. As of June 13th, FFIE had delivered only 12 FF 91s to users.
In response to the current predicament, FFIE founder Jia Yueting has proposed the "Sino-U.S. Automobile Industry Bridge Strategy," and will launch mass-market models priced at $20,000 to $30,000 and $30,000 to $40,000. Jia Yueting stated that they will enable the core technology used in the $300,000 FF 91 to be transferred to the mass-market models, apply the concepts and models used in LeTV Super TV and LeTV Super Phone to mass-market models, including direct-to-user full processes, "double the performance for half the price," and extreme price-to-value ratio.
In the eyes of industry insiders, using 'technical means' to boost the stock price is not a long-term solution for any company; for FF, improving the company's poor financial situation as much as possible is the fundamental way to stay at the "card table".
Industry insiders believe that using "technical means" to increase stock prices is not a long-term solution for any company. For FFIE, improving the current poor financial situation of the company as much as possible is the fundamental factor for staying in the game.
Editor/Somer