Shares of Faraday Future Intelligent Electric Inc. (NASDAQ: FFIE) plummeted in after-hours trading Friday, following the company’s announcement of further delays in delivering its first car to consumers. The smart car company, founded by Chinese businessman Jia Yueting, also proposed a new funding plan, requesting shareholders’ approval for a reverse share split to raise $300 million.
Faraday Future’s share price plunged by 37.7% to $0.28 during after-hours trading. This decline raises concerns as the Nasdaq stipulates that share prices should not remain below $1 per share for an extended period.
Reasons for the Delay
On Friday, Faraday Future disclosed that the second phase of car deliveries would be delayed from the end of June to the end of August. The postponement is attributed to supply time constraints from suppliers and the need for further safety tests on the unique features of their flagship model, the FF91.
During the first phase of delivery, which began on May 31st, the initial FF91 models were exclusively provided to industry experts known as Futurist Product Officers (FPOs), who underwent training on how to use the vehicles. Faraday Future emphasizes that the FF91 is distinct from regular models, requiring owners to complete their training before the cars are sold to them.
During the second phase of delivery, all FPOs will pay the full purchase price and become owners of the FF91 models.
The third phase will involve delivering the FF91 to customers, but Faraday Future did not disclose the start date for this phase. The company, however, emphasized its focus on delivering FF91s to the US market by the end of 2023.
Reverse Share Split for Funding
This marks the fifth delay in two years for Faraday Future, with each delay accompanied by a request for additional funding. In this instance, the carmaker seeks approval from shareholders for a reverse share split, intending to raise $300 million to expedite production of the FF91 2.0.
The proposed split aims to reduce the number of existing shares while increasing the value per share. The split ratio, ranging between 1:2 and 1:9, will be determined by the Board of Directors upon shareholders’ approval. Importantly, this move will not impact shareholders’ ownership percentages or voting rights, although no further details were provided by the company.
Mark Glenn is a financial journalist and breaking news reporter for ABBO News. Mark is known for his ability to deliver real-time news updates on market developments, mergers and acquisitions, corporate earnings reports, and regulatory changes, helping investors stay informed and make sound financial decisions.
