Zhitong
2024.06.25 12:12
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Pre-market once fell 40%! Faraday Future Intelligent Electric refiles merger plan for compliance

Faraday Future Intelligent Electric announced that the board of directors proposed a reverse stock split to meet the minimum listing price requirement, leading to a 40% drop in the stock price. The company received a non-compliance notice from Nasdaq last year, hence the proposed reverse stock split aims to increase the market price to mitigate the risk of delisting. However, due to lack of performance support, previous reverse stock splits did not significantly boost the stock price. The company also proposed increasing authorized shares to pursue equity and equity-related objectives. Currently, FFIE has a cash balance of only $5 million

According to Zhitong Finance, Faraday Future Intelligent Electric (FFIE.US) announced that its board of directors proposed a reverse stock split to meet the minimum listing price requirement. The proposed reverse split includes setting the consolidation ratio of issued common stock between 2:1 and 40:1, and correspondingly reducing the total number of common shares authorized to be issued by the company. The final ratio will be determined by the board of directors after shareholder approval, and the option to abandon, postpone, or delay the reverse stock split is available. In pre-market trading, the company's stock price once fell by 40%, then narrowed the decline, and as of the time of writing, the decline was 27% to $0.2379.

In December last year, FFIE's stock price fell below the Nasdaq's minimum closing price requirement for 30 consecutive trading days, resulting in the company receiving a non-compliance notice from Nasdaq. The company requested a hearing with Nasdaq's hearing panel to discuss compliance plans. The proposed reverse stock split aims to increase the market price of common stock to mitigate the risk of delisting from the Nasdaq capital market.

The company informed Nasdaq's hearing panel that it will target a post-reverse split stock price of at least $5 per share. The company also stated that if its stock price naturally reaches Nasdaq's minimum price requirement, it may postpone or not implement the reverse split.

Prior to this, FFIE has used reverse stock splits multiple times to boost its stock price. In October 2022, FFIE shareholders approved a reverse equity split plan with a ratio ranging from 2:1 to 10:1; on August 17 last year, FFIE shareholders approved a reverse equity split with a ratio ranging from 2:1 to 90:1; on February 5 this year, FFIE shareholders once again approved a reverse stock split plan with a ratio of 3:1.

However, due to the lack of performance support, the above three reverse equity splits did not have a significant impact on FFIE's stock price. The 2023 financial report shows that FFIE's annual revenue was only $800,000, while the net loss was as high as $432 million. As of May 23 this year, FFIE's cash balance was only $5 million, including $2 million in restricted funds.

It is worth noting that at the upcoming annual shareholders' meeting, the company also proposed to increase authorized shares to better pursue equity and equity-related strategic financing