Faraday Future stock tumbles 40% amid an internal battle with the Board of Directors

Written by Cláudio Afonso | info@claudio-afonso.com | LinkedIn | Twitter

The share price of the EV startup Faraday Future tumbled more than 40% to $1.95 during the first minutes of Friday’s session giving the company a Market share value of around $650 million. The EV startup — that in March had only 401 preorders for its first model — has been struggling with internal issues namely the removal of Brian Krolicki from the Board of Directors.

From the first day of June until July 18 the stock price increased by 208% from $2.52 to $7.84 reaching a new 8-month high after being named one of the candidates for a short squeeze. Since then, the stock has been shorted in high

In a 13-D filing form filed on Monday, the major shareholder FF Top reiterated that the Board of Directors “is not treating FF Top’s proposal with the gravity, urgency and fairness it deserves”

Recently, FF Top Holding (which is a major shareholder of Faraday Future) delivered a notice of removal of the Top Designee Brian Krolicki from the Board of Directors. Krolicki was the 33rd Lieutenant Governor of Nevada (from 2007 to 2015) and a Board member of Faraday Future since April 2020.

“The Reporting Persons are concerned that a subset of the Board of Directors (including Mr. Brian Krolicki) is not treating FF Top’s proposal with the gravity, urgency and fairness it deserves in light of the Issuer’s financial condition and the current adverse financing market conditions. The Reporting Persons believe that this is the same subset of board members that is driving the Issuer to breach its obligations under the Shareholder Agreement to take all “Necessary Action” (as defined in the Shareholder Agreement) to remove Mr. Brian Krolicki from the Issuer’s Board of Directors and replace him with Ms. Li Han, who is FF Top’s new “FF Top Designee” (as defined in the Shareholder Agreement).

FF Top said recently it has attempted to address the Board of Directors of the EV maker for the “concerns regarding the performance and direction of FFIE under the Board’s leadership” and “hopes that FFIE will constructively engage with FF Top and FFIE’s other shareholders to address these concerns”.

“In addition, FF Top hopes that FFIE complies with its obligations under the Shareholder Agreement to facilitate the removal of Mr. Krolicki and the appointment of Li Han as his replacement,” FF Top wrote.

In early June, Faraday Future announced that selected Cerence’s AI-powered text-to-speech (TTS) technology to enable natural, human-like communication for the in-car assistant in its FF 91 ultra-luxury electric vehicle, set to start production in Q3 2022. With Cerence TTS, the FF 91’s voice assistant delivers information and responds to prompts – ranging from news and weather to point-of-interest details, navigation, parking, and fuel.

Recently, the company reported its Q1 2022 Financial results reporting total assets of approximately $706 million ($276 million of cash) and 401 preorders for the upcoming FF91 model.