Last month, Faraday Future (hereinafter referred to as "FF Automobile") experienced a wave of market trends, with its stock price soaring from less than 5 cents to $1.65, capturing the attention of the capital market. However, this market trend has only passed for more than a month, and FF Automobile's stock price has fallen back less than $1. As of the close on June 24th local time, Faraday Future closed at $0.326 per share, down 17.68%, and fell 36.5% after hours to $0.207 per share. So far, FF Automobile's stock market trend has continued for another 18 trading days.
To maintain the company's listing status, on June 25th, FF Automobile announced its intention to merge shares again. If the joint venture proceeds normally, this will be the second joint venture in FF's history. However, in August last year, FF Automobile only maintained its stock price for two months through a joint venture. It is obvious that capital has seriously insufficient confidence in it.
It is worth mentioning that recently, FF Automobile was caught in controversy among retail investors, and industry insiders believe that this may have to some extent caused a bearish view of capital.
Latest situation:
Less than $1 for 18 consecutive trading days, FF plans to join forces to "survive"
In May of this year, FF Automobile, whose stock price had been hovering below the delisting red line for a long time, experienced a groundbreaking market trend. Starting from May 14th local time, FF Auto's stock rose for three consecutive days with abnormal gains, topping the US stock market for several days. As of the close on May 16th, its stock price has risen more than 39 times compared to five trading days ago, and its after market price is only one foot away from $2.
For this surge, investors believe that it is a re valuation of the IP "Jia Yueting" by capital. In mid May, Jia Yueting officially announced that he would "save the company and subsidize car manufacturing through the commercialization of personal IP.".
Jia Yueting himself stated that this highlights the role of FF as a bridge between China and the United States in the automotive industry.
However, from an objective perspective, industry analysis may be related to the new tariff policy on electric vehicle exports from the United States to China. Shen Meng, a director of Xiangsong Capital, once told a reporter from Wancai News that FF is the only Chinese background electric vehicle concept stock developed locally in the United States, or it may be the only electric vehicle concept stock that will not be affected by the ban, or it may generate huge potential for merger and acquisition value imagination, attracting speculative investment.
Li Zhi, Chief Investment Advisor of Vertex Finance, also noticed that the stock price changes of FF Automobile are also related to the "Meme concept". It is reported that "Meme stocks", also known as internet red stocks, are usually driven by retail investors and use large social media platforms to achieve viral dissemination. These types of stocks have great volatility and a strong atmosphere of speculation.
Li Zhi's investigation found that two days before the abnormal increase in FF, Keith Gill, the leader of retail investors in the Game Stop (the first Meme stock in history) event, announced his return to the market, directly driving the enthusiasm of retail investors. The "Meme" stock selected by retail investors this time is FF Automobile.
However, the FF car, which has been in production for nine years and delivered only two digits, ultimately cannot convince secondary market investors to pay for its long-term success.
Starting from May 17th local time, the stock price of FF Automobile fluctuated and rebounded. As of the close on June 24th local time, Faraday Future closed at $0.326 per share, down 17.68%, and fell 36.5% after hours to $0.207 per share. So far, FF Automobile's stock market trend has continued for another 18 trading days.
On April 24th of this year, FF Automobile received a regulatory letter from the NASDAQ Stock Exchange, confirming its delisting due to its closing price being below $0.1 for ten consecutive trading days. Before the May market, FF appealed the delisting decision. The subsequent soaring stock price once gave FF Automobile full confidence, but now it seems that the crisis has not yet been resolved.
In order to maintain the company's listing status, on June 25th, FF Automobile announced its intention to merge shares again. FF Automobile publicly stated that the company has submitted a proposal for a reverse stock split with a ratio range of 1:2 to 1:40, and stated that "if the stock price naturally reaches a long-term compliance level, the company may choose to postpone or not implement the reverse stock split.".
If the joint venture proceeds normally, this will be the second joint venture in FF's history. In August 2023, FF Automobile announced for the first time a reverse equity split, intending to increase the value per share through a joint stock merger to meet the listing requirements. After the merger, the stock price of FF Automobile reached $22 per share on August 17th. But since early September, the company's stock price has plummeted by about 96%, and by early November, it had fallen back to the level of a "fairy stock", the entire process lasting only two months.
Previous controversies:
Does the total share capital expand tenfold overnight? Stock investors exclaim that they have been "stabbed in the back"
FF Auto's stock has once again fallen out of favor, and industry insiders believe it is closely related to the recent incident of a 10 fold overnight increase in total share capital.
On May 29th, FF Automobile released its latest 2023 annual report. However, overnight, the total share capital of the company expanded from over 40 million to over 400 million shares, which has been questioned by investors.
On May 30th, Jia Yueting personally explained this phenomenon through a video. He stated that the 10 fold expansion of the total share capital was due to a misunderstanding caused by delayed annual report release and delayed data updates.
Jia Yueting emphasized that the 400 million share capital was not generated overnight. It was gradually issued to existing institutional investors more than four months before the annual report was released, and these investors purchased convertible bonds at least six months ago. The company has already disclosed this part of the content.
However, Jia Yueting's clarification has not been understood by investors. In the comments section of its social media platform, many netizens who purchased FF stocks pointed out that concealing private placements was a "carefully designed financial securities fraud" and "technical concealment of private placements", causing huge losses. Why are investors so angry?
"The investors originally thought it was a Meme concept stock, but when the total share capital showed only over 40 million shares, they wanted to speculate and launch a short selling market. However, they found out that it was not right. The selling price may be ten times larger than they imagined!" Li Zhiru analyzed the investment logic of investors to reporters from Wancai News.
He pointed out that the highest turnover rate before the FF car market was only a few times, but during the market period (May 14th, 15th, 16th), the turnover rates were over 36 times, 31 times, and 26 times, respectively. This is also due to the actual total share capital being 10 times the total share capital displayed on the trading platform. "The actual turnover rate may have to be divided by 10."
When it comes to the motivation for investors to enter, Li Zhi's analysis believes that it was during this period that the company used news such as the Meme concept, China US car tariffs Lenovo, and the commercialization of Jia Yueting's personal IP to achieve a stock price increase of nearly 100 times in six trading days, from around 0.04 on May 10 to the highest of 3.90 on May 17. "Meme concept investors are betting heavily on Jia Yueting's determination to raise the stock price and maintain its listing qualification."
However, when the total share capital of the company expands to around 440 million shares, FF can easily achieve the goal of maintaining its listing qualification through reverse stock split (merger), and the motivation to simply raise the stock price and maintain its listing status is greatly weakened. If the real share capital is publicly disclosed at this time, retail investors are unlikely to enter.
Li Zhi pointed out, "Nowadays, due to delayed disclosure of annual reports, the total amount of equity is not transparent, which poses a huge risk of unfair disclosure for funds entering speculation due to unclear actual share capital of the company."
"Individual investors enter, high positions take up, and large investors exit. Many TV dramas related to the stock market have this kind of plot," a senior investor told a reporter from Wancai News. This is also why investors feel deeply "cut off".
Nowadays, it seems that Jia Yueting's statement of "standing firm with all retail investors" is no longer able to soothe the hearts of the injured retail investors.