Faraday Future Announces 1-for-40 Reverse Stock Split

Key Points

• Faraday Future Intelligent Electric Inc. (FFIE) announced a 1-for-40 reverse stock split on August 4, 2024.
• The reverse stock split is expected to take effect at 5:00 pm on August 15, 2024.
• Faraday Future's common stock will begin trading on a split-adjusted basis upon market open on August 15, 2024.
• The reverse stock split will result in a reduction of the number of outstanding shares from approximately 4 billion to approximately 100 million.
• The reverse stock split is intended to help Faraday Future regain compliance with the Nasdaq's minimum bid price requirement.

Background

Faraday Future is an electric vehicle startup that was founded in 2014. The company has been working on developing its first production vehicle, the FF 91, for several years.

In April 2021, Faraday Future announced that it had received a $2 billion investment from a consortium of investors led by the Chinese property developer Evergrande Group.

Faraday Future's stock price has been volatile in recent months. The stock has traded as high as $40 per share and as low as $2 per share.

Rationale for Reverse Stock Split

A reverse stock split is a transaction that reduces the number of outstanding shares of a company.

Companies typically execute reverse stock splits to increase their stock price and to regain compliance with stock exchange listing requirements.

Faraday Future's reverse stock split is intended to help the company regain compliance with the Nasdaq's minimum bid price requirement.

Market Reaction

Faraday Future's stock price fell more than 10% in pre-market trading on Thursday following the announcement of the reverse stock split.

Some investors may be concerned that the reverse stock split is a sign that Faraday Future is in financial trouble.

However, Faraday Future has stated that the reverse stock split is not a sign of financial distress and that the company is still on track to launch its first production vehicle in 2023.

Conclusion

Faraday Future's reverse stock split is a significant event for the company.

The reverse stock split is intended to help Faraday Future regain compliance with the Nasdaq's minimum bid price requirement.

The market reaction to the reverse stock split has been mixed, with some investors expressing concern about the company's financial health.

However, Faraday Future has stated that the reverse stock split is not a sign of financial distress and that the company is still on track to launch its first production vehicle in 2023.