Faraday Future, the electric car maker which has purchased a 1 million square foot facility for a production plant in Hanford, has again fallen out of compliance with the Nasdaq Stock Market listing rules, according to a filing with the Securities and Exchange Commission on Jan. 10.
Michael Ward, a CFA and equity research analyst who is listed on Faraday Future's website as an analyst who follows the company, said in an email that non-compliance with the Nasdaq would be significant, but that Faraday Future is expected to regain compliance.
The company will have 45 days to submit a plan to regain compliance or will be removed from the Nasdaq. Faraday Future received its first notice of non-compliance from the Nasdaq on Jan. 4 for failing to hold an annual shareholders meeting within a year of Dec. 31, 2021.
John Schilling, a spokesperson for Faraday Future, said the company intends to work with the Nasdaq to maintain its listing and is actively drafting a response to Nasdaq with a plan to regain compliance and hold an annual shareholders’ meeting as soon as possible.
Faraday Future has struggled with compliance issues in the past. The company disclosed in a separate SEC filing in April of 2022 that they were in danger of being removed from the Nasdaq for noncompliance after failing to file an annual shareholder's report on time. The company subsequently received another non-compliance notice from the Nasdaq at the end of October for failing to keep stock price equal to or greater than $1.
The company purchased the former Pirelli tire plant in Hanford in August of 2017, projecting hundreds of jobs for the local area. The FF91 model was initially revealed the same year with an expected production date for 2018. Funding issues delayed the production until 2019, when a new estimate expected production to begin during the third or fourth quarter of 2022. This date was also pushed back due to funding issues.
Faraday Future’s most recent estimates say production of the FF91 is expected to begin at the end of March, with deliveries before the end of April. Schilling said the company remains on-track to meet these estimates and that the 8-K filing has no impact on meeting their production timeline.
If the Nasdaq accepts Faraday Future’s plan to regain compliance, the company may be granted an exception in order to regain compliance by June 29. Part of regaining compliance will include maintaining a closing share price at $1 or more for 10 consecutive trading days before May 1, 2023.
At the time of writing, Faraday Future has a share price of $0.46, an increase in share price of $0.13 and 37 percent over the last five days. Over the last six months, though, the company has watched the value of their stock tumble over 90 percent compared to a share price of $5.44 on July 13.
In the 8-K filing, Faraday Future states they plan to implement a reverse stock split approved by stockholders in November before compliance must be regained on May 1.
A reverse stock split entails combining existing shares of the company in order to increase share price. The factor at which stocks will be reverse-split is unknown, with the filing stating that the range Faraday Future is considering includes numbers anywhere as low as a 1 for 2 ratio and as high as a 1 for 10 ratio.
Ward said a reverse stock split would have no impact on the operations of the company but could affect traders’ perception of the share, noting the market generally has an unfavorable view of shares with a price under $1.
