On Friday, shares of electric vehicle startup Faraday Future Intelligent Electric Inc. gave up some of the gains they had made in recent weeks. This came after a week of extreme ups and downs, including a record-setting drop.
The stock fell the most ever in a single day on Wednesday, but it started to rise again on Thursday. Faraday Future FFIE, +3.20% shares closed Friday up 3.2% on a volume of 219.42 million shares, which was higher than the 65-day average volume of 161.82 million shares.
A social network for investors and traders called Stocktwits told BourseWatch that the community’s view on Faraday Future became “extremely bullish” on May 13, when many users pointed out that the stock had a better technical set-up. The week before, prices and momentum had levelled off. On the 13th, prices and momentum had their first strong up day, rising 32%, Stocktwits said in a statement. “That put momentum traders back on the stock’s radar right away.”
In light of this, shares of Faraday Future went up an amazing 367.5% on May 14. They then went up 147.2% and 134% the next two days.
As with other meme stocks like GameStop Corp. GME, +2.34% and AMC Entertainment Holdings Inc. AMC, +2.36%, it was the return of influential trader Keith Gill, also known as Roaring Kitty, to social media that set off the trend. Along with that, the platform said, “that made traders look for other heavily shorted stocks, like Faraday, that could see a major squeeze.”
Stocktwits explained that the company’s full-year results released late Tuesday showed that the stock had gone up nearly 10,000% from its recent lows during the craze. However, as with most meme stocks, its earnings report this past Wednesday brought it back to reality.
The electric vehicle (EV) startup made $800,000 in sales, up from nothing in 2022, and a loss of $432 million, down from a loss of $602 million in 2022. The company said that Faraday Future didn’t start sending out cars until the third quarter of 2023. Faraday Future has not yet shared its results for the first quarter.
On December 31, 2023, the company had $4 million in cash on hand, which included $2 million in restricted cash. This was down from $17 million at the end of the previous year. As of May 23, Faraday Future had about $5 million in cash on hand, which included $2 million in restricted cash. Faraday Future sent out a “going concern” warning on Tuesday.
Faraday Future is still a “classic” meme stock for Stocktwits. “Market mechanics, not business fundamentals, are the main reason why the stock price is going up,” the platform said in the statement. “Like its peers, the company has a core group of investors who believe in its long-term goals and potential.” Most of the talk and attention, though, is about its price momentum, the chance of a short squeeze, and other market-related factors.
A company called Faraday Future is on the Nasdaq’s Reg SHO threshold list. At least 10,000 shares of each security have failed to arrive at a registered clearing agency on five consecutive settlement days. This is the list of securities where the number of fails is at least 0.5 percent of the issuer’s total shares outstanding. Regulation SHO was made by the SEC to stop what is called “naked short selling.”
A person going by the name Obi seems to be a meme-stock trader who has been following the stock this week.
The price of Faraday Future shares is down 15.8% in 2024, while the S&P 500 index has gone up 10.6%.
