Electric vehicle manufacturer Faraday Future announced plans for a reverse stock split to boost its stock price in order to meet Nasdaq listing requirements.
Faraday Future, which has a manufacturing plant in Hanford, plans to do a one-for-three reverse stock split on Feb. 29.
The backstory: Late last year Nasdaq sent a notice to the company notifying it that a minimum closing share price of $1 is required to maintain a listing on the market.
- As of publication Tuesday, Faraday Future’s stock price was under $0.08. The stock price dipped below $1 last November and had peaked at $1,476 per share in January 2021.
- Faraday Future underwent a reverse stock split last August at a ratio of 80-1.
- Struggles with the stock price reflect supply chain issues and cash flow issues for Faraday Future, which reported a quarterly loss of $78.05 million last September.
The big picture: Company stockholders voted on Feb. 5 to approve the reverse stock split, reducing authorized shares from nearly $1.4 billion to over 463 million.
- Faraday Future has invested over $200 million in the Hanford manufacturing plan, which has the future potential annual production capacity of 10,000 vehicles.
What they’re saying: Faraday Future CEO Matthias Aydt wrote an open letter on Sunday, sharing an updated master plan for growth in 2024 and aligning expectations as to where the company presently stands.
- Aydt said the company expects to close on an additional round of funding from strategic and financial investors.
- “We are succeeding in reducing our monthly cash burn by cutting back on spending that is no longer necessary given our more advanced stage of development while continuing to balance investments into the business that are critical to moving the Company forward,” Aydt said.
- He added the company is prioritizing cash flow breakeven over volume to avoid scaling production too quickly. He also believes the company will break even at a lower vehicle production number than competitors.
