In an extremely crowded and challenging electric vehicle market, investors need to be highly selective. Faraday Future Intelligent Electric (NASDAQ:FFIE), which is often shortened to Faraday Future, might seem like an intriguing EV startup. However, it’s much too risky to buy and hold Faraday Future stock in 2024.
There are so many red flags associated with Faraday Future that it’s actually hard to know where to start. So, I’ll begin with a summary of Faraday Future’s less-than-encouraging financials, followed by other eyebrow-raising problems.
An Uncertain Future for Faraday Future
The most recently released financial report for Faraday Future covers 2023. Yes, I realize that’s a long time ago — but we’ll get back to that topic in a moment.
To provide some context, we need to discuss 2022 first. Faraday Future had zero revenue that year. The company’s cost of goods sold was also zero, but that’s only because the company didn’t actually sell anything.
Turning now to 2023, Faraday Future generated revenue of $800,000. Hey, at least that’s better than zero. Faraday Future also reported cost of goods sold totaling $43 million, as well as a $432 million net earnings loss.
So, Faraday Future is a money bleeder. Furthermore, the company chose not to provide any production-target guidance for 2024 at all. Surely, that’s not a positive sign.
Now, let’s talk about the reason I can’t provide any recent financial data on Faraday Future. It’s because the company is very, very late in filing its required Form 10-Q for 2024’s first quarter. By now, most publicly listed companies have already filed their first-quarter and second-quarter financial reports.
Faraday Future Gets Two Warnings
The Nasdaq exchange warned Faraday Future about its lack of timeliness in filing the company’s Form 10-Q. This issue “could serve as an additional basis for the delisting of the Company’s securities from Nasdaq.” (I’ll discuss the word “additional” in a minute.)
Faraday Future claims that “work on the quarterly report for the first quarter 2024 on form 10-Q is actively progressing.” That claim was made on May 29, and we’re all still waiting.
You might wonder why Faraday Future referred to the Nasdaq exchange’s “additional basis” for potentially delisting the company. That’s because the Nasdaq exchange also warned that it might delist Faraday Future because the company’s share price was too low for too long.
At some point, Faraday Future stock violated one rule by trading below $1 for 30 consecutive trading days. Moreover, the stock broke another Nasdaq rule by trading at 10 cents or less for 10 consecutive trading days.
As of this writing, the Faraday Future share price is around 51 cents. So, at least the stock is above the 10-cent threshold, but it’s still below $1. Faraday Future remains noncompliant with the Nasdaq exchange’s listing requirements.
Faraday Future Stock Is Just Too Much Trouble
Faraday Future is a money-losing operation that didn’t provide any forward vehicle-production guidance. Also, Faraday Future received warnings from the Nasdaq exchange for being very late in filing its required quarterly financial report, and for violating minimum share-price requirements.
There are just too many problems associated with Faraday Future to have any real confidence in the company’s future. I hate to call it a “stick a fork in it” stock, but Faraday Future stock could actually go to zero at some point.
Consequently, I absolutely do not recommend risking your investable capital on Faraday Future Intelligent Electric.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.