FFIE stock is down 84.6% YTD but up 13% today. Does this mean Faraday Future has turned a corner?
What Does Faraday Future Do?
Faraday Future Intelligent Electric Inc (NASDAQ: FFIE) operates as a luxury mobility ecosystem company. The company develops a mobility ecosystem that integrates clean energy, AI, the internet, and usership models. Faraday Future Intelligent Electric serves customers worldwide.
The company is a class-defining luxury EV company. The company has pioneered numerous innovations relating to its products, technology, business model, and user ecosystem since its inception in 2014.
FFIE aims to perpetually improve how people move by creating a forward-thinking mobility ecosystem that integrates clean energy, AI, the Internet and new usership models. Faraday Future's first flagship product is the FF 91 Futurist.
Faraday Future intends to build its Ultimate Intelligent Tech Luxury FF 91 Series out of its Californian production plant in Hanford. This facility is currently being built and marks the beginning of Faraday Future's global production platform.
The company addresses its additional future production capacity needs through a contract manufacturing partner in South Korea. It also works with engineering, sales, and operational teams in China and plans to develop a manufacturing setup in China through a joint venture.
Since its founding in 2014, Faraday Future has created significant innovations in technology and products. It aims to redefine the future of intelligent mobility.
How Does Faraday Future Make Money?
Faraday Future is a development-stage company and has not yet generated any revenue.
The company's anticipated introduction of the FF 91, its first vehicle launch, is expected to generate most of its future income while other vehicles are in development.
The FF 91 was expected to come to market in July 2022, but this has been pushed back, and there is no firm date yet set.
This luxury model is expected to have a starting price of $180k, with customized models rivalling the Bentley price point of around $300k.
Is Faraday Future Running Out of Money?
Faraday must raise more funds to bring its FF 91 to market. It continues to pursue financing alternatives with multiple parties, but a misinformation campaign hindered this process.
The company hired an independent law firm to conduct a thorough independent external investigation which found the allegations to be without merit.
Some of Faraday's directors have faced the threat of lawsuits, physical violence and even death.
Now the company has reached a governance resolution with its major shareholders and brought new financing to the table.
Faraday Future will receive up to $40m in near-term funding through convertible secured notes and warrant exercise payments, subject to certain conditions.
Under a second financing agreement, it will receive up to $60m in near-term funding from Senyun International Ltd., a Daguan International Ltd. wholly-owned investment entity, in the form of convertible secured notes, also subject to certain conditions.
This $100m will not be enough to get the FF 91 out the door. Faraday is in ongoing discussions with potential financing sources for additional capital required to fund operations through the end of 2022 and beyond.
In an attempt to conserve cash and reduce expenses, Faraday is cutting its workforce, reducing expenses and implementing payment delay measures. The company's financial condition is undoubtedly worrying, notably coinciding with current economic conditions and rising competition in the luxury EV space.
FFIE Stock Financials
Over the past year, Faraday Future Intelligent Electric Inc (FFIE) has traded between $0.71 and $11.20. Today it trades at around $0.92.
FFIE stock's market cap has plunged from $897.4m at the end of December to $786.6m at the end of June to $274m today.
During the first half of 2022, Faraday Future's shares outstanding increased from 168.7 million to 302.5 million.
Year-to-date, the Faraday Future Intelligent Electric Inc (FFIE) stock is down by -86.14%, while the S&P 500 is down by -23.8% over the same period.
FactSet analysts have a Hold rating on FFIE stock.
FFIE stock does not come with a dividend.
Faraday Future Governance Resolution
Faraday Future and its largest shareholder have reached an agreement regarding their governance dispute.
Its key shareholder FF Top will dismiss its lawsuit against the company and Faraday's Board of directors.
Meanwhile, Sue Swenson will step down from her role as Executive Chairperson of the company and Chairperson of the Board upon the company receiving $13.5m in net financing proceeds.
Sue Swenson and Brian Krolicki will step down from the Board upon the company obtaining $85m in incremental financing commitments and $35m in net proceeds.
Finally, Adam He, a senior executive with extensive public company experience, has been appointed as a new independent board member to Faraday.
The company has secured a new $100m financing commitment.
Faraday Future Growth Potential
Once it brings the FF 91 to market, the company has plans to develop additional luxury EVs.
A crucial part of Faraday Future's growth strategy includes developing its business in China.
FFIE Stock Risks
In the short term, there are many risks associated with FFIE stock. These include running out of cash, rising inflation, an economic slowdown and increased competition.
Faraday Future has incurred losses in the operation of its business and anticipates that it will continue to incur losses in the future. It may never achieve or sustain profitability.
Even if the company brings its FF 91 series to market, it may continue to incur substantial losses as it attempts to develop newer products.
There may be a lack of demand for the FF 91 series and its relevant services due to increasing competition, challenging macroeconomic conditions, or regulatory changes.
Growing in China is in jeopardy as the former CEO of Faraday Future, Jia Yueting is restricted from working for Faraday in China, and the company relies on him to develop its business there.
How Much FFIE Stock Does the CEO And Other Management Own?
Jordan Vogel, Lead Independent Director of Faraday Future's Board, owns 1.4% of Faraday Future Intelligent Electric. Faraday Future went public via Vogel's SPAC Property Solutions Acquisition Corp. in 2020.
Interestingly, Palantir Technologies (NYSE: PLTR) owns 0.76%, as it was an early investor in the firm. And Faraday also uses Palantir's software under a four-to-six-year commercial contract.
Meanwhile, China's Evergrande Group has a 20% stake in FFIE stock, and FF Top Holding owns 16.4%.
Is FFIE Stock a Good Investment?
With share price dilution the norm, a real risk of running out of cash, the threat of litigation and a product that's inferior to the competitors in its class, FFIE stock doesn't offer many reasons to invest.
Broader market conditions are bearish, and a global slowdown in spending is likely. Meanwhile, inflation affects company input costs and encourages consumers to tighten their belts. For now, FFIE stock looks like one to avoid.
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