Written by Cláudio Afonso | LinkedIn | X
The shares of the electric vehicle startup Faraday Future crashed nearly 18 percent on Monday to $0.32 a few hours before announcing that its Board of Directors has approved a proposal for a reverse stock split of the Company’s common stock.
On early Tuesday, the stock is extending losses by another 40 percent to $0.186 per share as shareholders may face another dilution if the proposal is approved in the upcoming annual meeting.
The company is targeting a reverse stock split ratio ranging from 1-for-2 to 1-for-40 shares four months after the previous 1-for-3 reverse stock split.
After a four-month hiatus, the electric vehicle startup resumed deliveries earlier this month, handing over the FF91 2.0 to a retail shareholder.
The proposed reverse stock split is intended to address compliance with Nasdaq’s minimum bid price requirements. In a new video posted on late Monday, the CEO Aydt commented the effort from the company to comply with Nasdaq’s bid requirement.
In a statement, the company said it aims to achieve a post-reverse split stock price of at least $5 per share, though the Board may opt not to implement the reverse split if the stock price naturally meets Nasdaq’s requirements.
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The company has received a deficiency notice from Nasdaq last December after its stock price fell below the required $1.00 per share for 30 consecutive trading days. Further non-compliance was noted when the stock price dropped below $0.10 for ten consecutive trading days, resulting in Nasdaq’s determination to delist the company’s securities.
In addition to the reverse stock split, Faraday Future is proposing an increase in authorized shares to facilitate strategic financing efforts.
The startup says the proposed increase in authorized shares will enable the company to pursue equity and equity-linked financing opportunities, particularly in the Middle East.
Last week, the chief executive Matthias Aydt, shared on LinkedIn that he visited Ras Al Khaimah in the United Arab Emirates (UAE) aiming at reinforcing relationships and discussing strategic collaborations in the region, he said.
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Last November, the company announced it would enter into the Middle East market by signing strategic cooperation agreements with Master Investment Group and Siraj Holding LLC, marking the launch of the FF brand in the region.
In a statement posted on the official app, founder YT Jia hinted at the creation of a new subbrand aimed at the mass market segment, signaling the company’s broader ambitions in the automotive industry.
The company has recently disclosed it had “preliminary discussions with several global OEMs and suppliers” on how the company can “help build a bridge between US and Chinese automotive industries through industrial coordination and collaboration”.
Faraday’s founder has recently released a video criticizing what he described as “biased interpretations” from certain media outlets and “attacks by malicious short-selling institutions” affecting the company’s market performance.
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Written by Cláudio Afonso | LinkedIn | X
