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Faraday's future CEO:FF may have become a target for illegal short selling.

2024-04-24 Update From: AutoBeta NAV: AutoBeta > News >


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Recently, FF announced in an official Weibo post that it has completed the first phase of identifying and analyzing potential illegal transactions and is working with ShareIntel on the second phase of work to take further measures to reduce such activities. In this regard, Faraday's future founder Jia Yueting forwarded comments that efforts will be made to protect the interests of shareholders and investors.

It is understood that October 16. Jia Yueting, the future founder of Faraday, issued an open letter to all shareholders and investors, pointing out that the company is in its best stage of development since its inception, but its share price and market capitalization have fallen to less than 1% of the more than $3 billion in cash investment. Feel very sad and disappointed. In the open letter, Jia Yueting said that because of the serious deviation between the real value of FF and the value of the capital market, he was very anxious and was deeply ashamed that he did not bring due value return to all shareholders and investors. He hoped to make every effort to maximize the value of FF.

It is worth noting that in addition to issuing the open letter, Jia Yueting recorded a video saying that in order to protect the interests of shareholders, six major measures will be launched. Shareholder Intelligence Services LLC, a service provider of listed companies, has been officially signed to obtain, summarize, track and analyze shareholder trading information, investigate potential illegal short selling, and will consider all available recovery measures, including litigation. At the same time, it also said that it will continue to actively introduce potential strategic investors, invite a large number of professional media to visit FF, in-depth experience of products and technology, so that outsiders and investors can better understand the development status and true value of FF. On the cost side, continue to reduce operation and supply chain costs to achieve all strategic goals, including rapid capacity increase.

In the official statement, FF specially pointed out that through professional analysis, ShareIntel has identified the reporting imbalance in FF shares, which may have a significant impact on the public's FF holdings and average daily trading volume. These imbalances may be caused by non-compliance or illegal trading activities, indicating that some counterparties may sell large amounts of FF common shares but fail to deliver.

On ShareIntel's findings, Matthias Aydt, global CEO of FF, said: "based on the current analysis of ShareIntel, FF may have become a target for market manipulation and illegal short selling. The board and management of FF attach great importance to the interests of shareholders and will take all necessary actions to prevent FF from becoming the target of market manipulation. At the same time, it said it would continue to cooperate with ShareIntel to crack down on potential manipulation and poor illegal short selling and trading activities to help ensure fair market conditions. David Wenger, president and CEO of ShareIntel, agrees and will continue to help FF identify possible abusive and illegal naked short selling and take action to reduce such activities and help maximize the transparency of shareholder ownership.

It is understood that since the end of August, Faraday future U. S. stock prices have continued to decline, as of October 13, FF shares fell to $1.05, with a market capitalization of $27.3 million. As a reference, Faraday's future FFIE offering price of $13.78 closed at $13.98 on its first day of trading, with a total market capitalization of $4.535 billion.

In recent months, though, FF has been making various adjustments to boost its share price. For example, on August 17th, the government introduced a reverse equity division policy, which carries out a reverse equity division of the company's issued common shares, which simply means a partnership, with an implementation ratio between 1:2 and 1:90. In addition, it is approved that when the proportion of shares implemented is between 1:8 and 1:90, the maximum number of authorized common shares is 12.355 billion shares divided by the partnership ratio decided by the board of directors. Officials said at the time that the approval was expected to provide sufficient shares in follow-up financing to support FF 91 Futurist's production climbing and other strategic objectives of the company. Although affected by the news, Faraday's share price rose slightly in the future, but it was still less than $1.

In September, in order to restore investor confidence, Faraday announced the appointment of a new global CEO in the future, as well as a management stock purchase plan, saying that FF management would further strengthen its ties with shareholders through share purchases. Among them, senior executives Jia Yueting, Chen Xuefeng, Matthias Edette of FF Global CEO, and other executives volunteered to increase their holdings at market prices. Jia Yueting said at the time that the move demonstrated the strong collective ownership of FF executives and their great confidence in the company, and reflected a high degree of alignment of interests between senior executives and the company. Matthias Edette, CEO of FF Global, also said at that time, "from the performance of the company's share price, management believes that FF is seriously undervalued by the market, so we hope to demonstrate to shareholders the commitment and belief of management to the company by signing these agreements."

However, the effect of these measures is very small. For now, Faraday's future share price remains low, closing at $0.267 as of December 15, with a total market capitalization of $15.33 million. Compared with the market capitalization that closed on October 13th, the market capitalization nearly halved. Of course, Faraday's future share price has been unable to rise, which has something to do with its car-building schedule and prospects.

As we all know, since the establishment of Faraday in the future, the funding problem has been followed, and mass production delivery has been skipped many times. It is not easy to achieve mass production, the delivery of vehicles is still single digits. At the same time, the financial aspect is still in a state of loss. FF's third-quarter auto sales revenue was $551000 and its third-quarter net loss was $78.046 million, according to the data. At the end of the third quarter, Faraday had only $8.567 million in future cash and restricted cash, including $1.853 million in restricted cash. If you look at the net loss in the third quarter, Faraday's future cash will not be enough to support a quarter.

There is no doubt that this situation does not worry investors. In addition, if the long-term share price is less than $1, there will be a risk of Nasdaq delisting. Under all kinds of unfavorable factors, the capital market will not be optimistic, and the stock price will not be boosted.

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