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FFIE Stock, a Beaten-Down EV Play, Is Poised to Rebound…

Faraday Future Intelligent Electric Inc to Launch High-End EV

Many electric vehicles (EVs) are the stuff of science fiction, in that many companies keep making promises that their EV models will be manufactured in the future. As such, the momentum that initially fueled EV stocks throughout 2020 has waned.

For Faraday Future Intelligent Electric Inc (NASDAQ:FFIE), the future is now (or at least soon). The company said on May 12 that it’s on track to start producing its flagship EV this summer.

“FF will be the first truly high-end, high-performance, luxury, intelligent EV manufacturer when we introduce our flagship model, the FF 91, to customers in Q3 later this year.” (Source: “Faraday Future Marks Production Milestone #5 at its Hanford, Calif. Manufacturing Facility, Remains on Schedule to Launch in Q3 2022,” Faraday Future Intelligent Electric Inc, May 12, 2022.)

Investors were upbeat about the news. In the five days after the announcement, Faraday Future stock rallied by 76% to about $3.00 per share.

Sustained growth has been a problem for FFIE stock, however. As of this writing, Faraday Future stock is down by:

  • 28% over the last month
  • 38% over the last three months
  • 62% over the last six months
  • 43% year-to-date
  • 72% year-over-year

Some of those losses can be attributed to rising interest rates and investors shunning speculative growth stocks.

Another reason for those declines is that Faraday Future Intelligent Electric Inc has been promising the imminent production of the FF91 for years now, only to pull the car mats out from under drivers’ (and FFIE stock investors’) feet.

Chart courtesy of StockCharts.com

After Years of Delay, Production Slated for July

Faraday Future Intelligent Electric Inc unveiled its first concept version of the FF 91 in 2017, with production planned for 2018. That clearly didn’t happen, but now there’s hope.

The company recently announced that it had achieved its fifth production milestone (of seven). Work was underway on all of the major mechanical, electrical, and plumbing systems needed to support equipment installation. (Source: Faraday Future Intelligent Electric Inc, May 12, 2022, op. cit.)

Three other milestones that Faraday Future has achieved since going public in July 2021 are foundation construction, pre-production builds for final engineering validation, and certification.

Milestone No. 6 is the complete construction of—and equipment installation in—final vehicle manufacturing areas. Milestone No. 7 is the start of production, which is scheduled for July.

“Our manufacturing facility in Hanford, California is developing at an impressive pace, and remains on schedule to deliver our first vehicles in Q3, now that we have marked five of our seven milestones,” said Dr. Carsten Breitfeld, Faraday Future Intelligent Electric Inc’s CEO. (Source: Ibid.)

Shareholders would have every right to dump Faraday Future stock if Faraday Future Intelligent Electric Inc fails to meet its final hurdle on schedule. On the other hand, if the company starts production as planned, FFIE stock could rebound quickly.

Investors haven’t been impressed by the production delays, but drivers can’t help but be impressed by the FF 91. It can go from zero to 60 in 2.4 seconds, it has a 130-kWh battery, and it has a range of more than 300 miles. (Source: “FF 91 Design,” Faraday Future Intelligent Electric Inc, last accessed May 24, 2022.)

The price of an FF 91 is higher than $200,000, so its target market is much smaller than that of most EVs. The market for FF 91s could increase, though, if the vehicle lives up to the hype.

“We remain confident that we will launch the FF 91 in the third quarter of 2022, and when we do, we expect Faraday Future to redefine the state-of-the-art in intelligent, electrified mobility,” said Breitfeld. (Source: “Faraday Future Reports Financial Results for Fourth Quarter and Full Year 2021,” Faraday Future Intelligent Electric Inc, May 13, 2022.)

2021 Q4 & Full-Year Results

On May 13, Faraday Future Intelligent Electric Inc announced its financial results for the 2021 fourth quarter and full year. Since the company hasn’t started EV production, its revenue is inconsequential at this point. What’s most important is that Faraday Future has enough money to get to the finish (or starting) line.

The company’s operating expenses in 2021 were $354.0 million, compared to $65.0 million in 2020. (Source: Ibid.)

The increase in expenses was primarily due to a rise in engineering, design, and testing services as the company re-engaged suppliers and made significant purchases of engineering, design, and testing services to progress the manufacturing of the FF 91. Faraday Future also significantly increased its employee headcount in 2021.

The company reported a full-year net loss of $517.0 million, compared to a net loss of $147.0 million in 2020. The change in net loss is attributable to its significant increase in operating expenses.

Faraday Future Intelligent Electric Inc ended 2021 with $505.0 million in cash.

“We made significant progress during the fourth quarter with several important milestones reached at our Hanford manufacturing plant and new Tier 1 supplier and partner agreements. In a challenging logistics and supply chain environment, we are working closely with our partners and remain on track for launch in Q3 2022,” said Breitfeld. (Source: Ibid.)

Analyst Take

Faraday Future stock is an EV stock that has taken a well-deserved beating since going public in July 2021.

That said, Faraday Future Intelligent Electric Inc is slated to start production of its long-promised luxury EV in July 2022. With 401 preorders, this could be just the beginning for Faraday Future. If it is, FFIE stock could surge in value.

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