LOS ANGELES - Faraday Future Intelligent Electric Inc. (NASDAQ: NASDAQ:FFIE), an electric vehicle and technology company, has declared a reverse stock split of its common stock at a ratio of 1-for-40, scheduled to take effect after market close on August 16, 2024. The company's shares are set to begin trading on a split-adjusted basis when markets open on August 19, 2024.
The reverse stock split follows a stockholder vote at the Annual Meeting on July 31, 2024, authorizing the Board of Directors to amend the company's Charter for this action. The Board approved the reverse stock split on August 4, 2024. As a result, every 40 shares of issued and outstanding common stock will be combined into one share.
The company's Class A and Class B common stocks will trade with new CUSIP numbers but will retain the FFIE ticker symbol on the Nasdaq Capital Market. The publicly traded warrants, under the symbol FFIEW, will also remain on Nasdaq, with adjustments to the number of shares of Class A common stock issuable upon exercise.
The reverse stock split will proportionally decrease the number of shares of common stock issuable upon conversion of the company's outstanding convertible securities and the exercise or vesting of its outstanding stock options, restricted stock units, and private warrants. The exercise prices of these instruments will proportionately increase. Moreover, the authorized shares of common stock will be reduced from approximately 4.17 billion to 104.25 million.
Stockholders will not receive fractional shares in the reverse stock split. Instead, those entitled to a fractional share will receive one full share of post-reverse stock split common stock. This action will affect all common stockholders proportionally and will not alter any stockholder's percentage ownership in the company.
Continental Stock Transfer & Trust Company has been appointed as the exchange agent for the reverse stock split. Stockholders with shares through banks, brokers, or other nominees will have their positions automatically adjusted to reflect the reverse stock split and need not take any further action, subject to their brokers' processes.
This announcement is based on a press release from Faraday Future Intelligent Electric Inc.
In other recent news, Faraday Future Intelligent Electric Inc. has modified its debt agreements to ease cash obligations. The company has entered into a Waiver Agreement with investors to adjust the terms of its convertible notes, promoting their conversion into common stock. This move is expected to improve the company's cash position.
In financial developments, Faraday Future reported revenue of $0.8 million and a net loss of $432 million for fiscal year 2023, a decrease from the previous year's loss of $602 million. The company also raised approximately $300 million through convertible notes and other financing methods.
Faraday Future has expanded its authorized common stock from 463.3 million to 4.17 billion shares, following approval at its annual stockholder meeting.
In addition, the company resumed its Start of Delivery Second Phase with the delivery of the latest FF 91 2.0 model.
There has also been a shift in the board of directors with the resignation of Li Han, who will continue to contribute in an advisory capacity.
The company has been granted an extension by the Nasdaq Hearings Panel to meet the stock exchange's listing requirements. Furthermore, Faraday Future appointed Macias Gini & O'Connell LLP as its new independent registered public accounting firm, replacing the previous auditor, Mazars USA LLP.
These are among the recent developments as Faraday Future continues to navigate the competitive electric vehicle market.
InvestingPro Insights
In the context of Faraday Future Intelligent Electric Inc.'s (NASDAQ: FFIE) recent announcement of a reverse stock split, several metrics and tips from InvestingPro provide a deeper understanding of the company's financial situation. As of the last twelve months leading up to Q1 2024, Faraday Future has a market capitalization of $74.13 million, indicating a relatively small size within the electric vehicle industry. This size factor is crucial as it often correlates with higher volatility in stock performance, which is consistent with the InvestingPro Tip that the stock generally trades with high price volatility.
The company's Price / Book ratio stands at 0.37, which suggests that the stock is trading at a low multiple of its book value. This could be perceived as a sign that the stock is undervalued, especially when compared to historical price/book ratios within the industry. This aligns with another InvestingPro Tip indicating that the stock is trading at a low Price / Book multiple.
However, it is essential to note that Faraday Future operates with a significant debt burden and may have trouble making interest payments on its debt, as highlighted by two InvestingPro Tips. The financial strain is further evidenced by the company's gross profit margin, which is reported at an alarming -7952.67%, and an operating income margin of -29755.34%. Such figures point to substantial operational challenges that the company faces.
For those interested in a more comprehensive analysis, there are additional InvestingPro Tips available that delve into Faraday Future's financial health, stock performance, and market valuation. With 22 additional tips listed on InvestingPro, investors can gain a more nuanced view of the company's prospects.
As Faraday Future prepares to trade on a split-adjusted basis, these insights are particularly relevant for investors considering the impact of the reverse stock split and the broader financial context of the company.
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