-December 8,2021-
The start-up luxury car maker, Faraday Future, who chose Hanford to launch a new electric car, held an investor video call from their manufacturing plant in the Hanford Industrial Park this week. The investor update came after a short seller investment group charged that claims the car maker had 14,000 preorders of their vehicles was inaccurate. J. Capital released a report claiming the 14,000 deposits were fabricated and that 78% of these reservations were made by a single undisclosed company that is likely an affiliate. Based on interviews with former Faraday executives, J. Capital also claims the FF 91’s technology is not ready to go into production. J Capital aims to drive down the price of the stock.
The charges gained traction when Faraday Future announced November 15, 2021 that the company’s board of directors formed a special committee of independent directors to investigate allegations of inaccurate disclosures.
Then Faraday was advised by Nasdaq they were not in compliance with Nasdaq Listing Rule after it postponed their third quarter earning report ending Sept 30.In their call, they offered detail of investments in the new Hanford manufacturing plant and new hires although the millions in expected spending will mean capital losses for the “foreseeable future” with an expectation of profitability by 2024.
Faraday held their business update call December 7 – not commenting on the allegations but working to assure investors it was still on schedule to make cars by July and offering details on their current financial picture.The company stock has been punished in recent months going from $16.50 a share when they received their $1.1 billion in funding to just $5.70 a share this Wednesday, after the December 7 investor call. A positive note – the price of the stock was up today.
As filed with the SEC on November 15, Faraday Future expects an operating loss to increase to approximately $143 million during the three months ended September 30, 2021, as compared to approximately $18 million operating loss for the three months ended September 30, 2020. The increase is primarily driven by increased costs to bring the Hanford manufacturing facility to full commercial production, says the company.
A handful of law firms have announced they are investigating the charges put forward by J Capital and inviting investors to join potential litigation if they are found to be true.
Faraday Future says since inception, it has incurred cumulative losses from operations and negative cash flows from operating activities, and expects to report an accumulated deficit of approximately $2.8 billion as of September 30, 2021. On November 12, Faraday updated their estimate that it will require $1.5 billion in additional funding, up from our previous estimate of $1.4 billion. This additional capital will fund the FF 81 and FF 71 programs and is not related to the initial FF 91 program.