Zhongtong Finance learned that Faraday Future (FFIE.US) announced that its board of directors has proposed a reverse stock split in order to meet the minimum listing price requirement. The proposed reverse split includes setting the consolidation ratio of the outstanding common stock between 2:1 and 40:1, and correspondingly reducing the total number of common stock authorized to be issued by the company. The final ratio will be determined by the board of directors after shareholder approval, and the reverse stock split may be waived, delayed or postponed. In pre-market trading, the company's stock price fell as much as 40%, and then narrowed, as of the time of publication, the decline was 27%, to 0.2379 US dollars.

In December of last year, FFIE's stock price fell below Nasdaq's minimum closing price requirements for 30 consecutive trading days, resulting in the company receiving a non-compliance notice from Nasdaq. The company requested a hearing with Nasdaq hearing panel to discuss compliance plans. The proposed reverse stock split is aimed at increasing the market price of common stock in order to mitigate the risk of delisting from Nasdaq's capital markets.

The company informed Nasdaq hearing panel that it will target the post-reverse split stock price at least $5 per share. The company also stated that if its stock price naturally reaches Nasdaq's minimum price requirement, it may delay or not implement the reverse split.

Prior to this, FFIE has used the method of 'reverse stock split' several times to increase its stock price. In October 2022, FFIE shareholders approved a reverse stock split plan with implementation ratio between 2:1 and 10:1; on August 17th last year, FFIE shareholders approved a reverse stock split plan with implementation ratio between 2:1 and 90:1; on February 5th this year, FFIE shareholders once again approved a reverse stock split plan 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.

It is worth noting that at the upcoming annual shareholder meeting, the company also proposed to increase authorized shares to better pursue equity and equity-related strategic financing.