Faraday Future Stock (NASDAQ:FFIE)
After making several statements on Tuesday on its financial health and plans to commence car deliveries, shares of Faraday Future Intelligent Electric (NASDAQ:FFIE) plummeted.
Faraday Future stock fell by more than 35% in the first minutes of trade and was still down by 33.8% at 1:50 PM ET.
What’s the Reason?
On Friday, Faraday issued a press statement saying the company will postpone beginning shipments of its high-performance FF 91 EV. It also said it will take two actions to assist it in wooing prospective investors and funding. Faraday suggested a reverse stock split of between 1 for 2 and 1 for 90 shares so that it could keep its Nasdaq listing. After shareholder approval of the proposal, the Faraday board will determine the reverse split ratio.
The business reportedly said it would offer more ordinary stock to raise as much as $300 million.
What Should We Do Now?
Faraday Future Stock dropped in value by about 90% over the last year and is now trading for less than the required $1 per share to remain on the Nasdaq. The firm needed help raising enough money to start manufacturing cars. Despite raising $135 million via the issuance of convertible secured notes in February, the company still needs additional capital to complete the delivery of its first cars and ramp up manufacturing.
Unfortunately for Faraday, supply delays and the necessity for further testing have pushed back the unveiling of its first cars to chosen purchasers to August from the end of this month. After the first round of shipments, it is planned to open shipments to all reservation holders.
Faraday did not promise to use common stock issues to raise extra funding. Still, this is the most probable scenario. It’s hardly unexpected that some investors sold their Faraday stock on Tuesday, given the company’s supply delays and the likelihood of further shareholder dilution.
Featured Image: Freepik
Author Shariq Khan 
