Faraday Future announced on Sunday its intention to execute a one-for-three reverse stock split in a bid to comply with listing requirements. The move, set to take effect on February 29, will mark the company’s second reverse stock split in five months, following a series of challenges that led to a drastic decline in its market value last year.
On Friday, Faraday Future’s shares closed at $0.09, valuing the company at approximately $11 million. The decision to pursue a reverse stock split was prompted by a notice from the Nasdaq in December, warning of a potential delisting due to the company’s shares trading below the exchange’s $1 minimum price for 30 consecutive business days.
Faraday Future has faced significant hurdles, including production delays that have persisted for years. In the quarter ending in September, the company reported a loss of $78.05 million.
According to research firm Canalys, the growth rate of the global EV market is projected to slow to 27.1% this year, down from an estimated 29% in 2023. Faraday Future’s peer, EV firm Nikola, is also at risk of delisting, with its shares trading below $1, a stark contrast from its peak of $80 shortly after its public debut in June 2020.
CEO Matthias Aydt commented on Monday that the company is focusing on achieving cash flow breakeven rather than rapidly scaling production, a strategy aimed at avoiding the pitfalls experienced by many of its competitors.
These remarks come in the wake of forecasts from rivals Rivian Automotive and Lucid Group, both of which anticipate 2024 production levels below previous estimates, citing a slowdown in EV demand.
