Text/Zhou Xiongfei
Faraday Future receives another delisting notice.
Recently, according to Faraday Future (hereinafter referred to as "FF"), it has received a notification letter from the NASDAQ exchange, which mentions that FF did not submit the 10-K annual report form for the end of December 31, 2021 at the specified time, in violation of the NASDAQ Listing Rules.
FF received an announcement from NASDAQ, screenshot from the announcement
The "10-K annual report form" mentioned in the letter is the performance data since the listing of FF, and in the deferred submission of financial reports, FF and its CPUO Jia Yueting are already familiar with the road.
As early as last November, FF received a notice from NASDAQ for failing to submit the third quarter financial report after listing on time, and was told that if it did not submit performance data within the specified time, FF might be delisted and delisted. After that, FF did not submit the third quarter of 2021 financial report data on the grounds of internal investigation.
Coupled with the fact that it was warned to delist by NASDAQ, it means that less than 10 months after the listing of FF, it has received two delisting notices, which is only one step away from delisting.
Behind these facts, Jia Yueting and FF have drawn cakes and cheated again and again.
At the end of February this year, FF held a quasi-production car off-line conference at its Hanford plant in the United States, at which Jia Yueting and its CEO Bi Fukang introduced the production progress and final mass production time of FF 91, but they did not introduce details such as the performance and configuration of the mass production model, so that in the eyes of the industry, the conference was another "painting cake" completed by FF.
Painting cakes like this, FF and Jia Yueting have been carried out many times. Whether it is the release of FF 91 mass production time through the so-called "Futurism Day", or the landing of the Chinese headquarters, or the construction of the sales network, it has not been realized in the end.
At the end of last month, according to 21st Century Business Herald, FF issued an announcement that some of its management team members and employees were summoned by the US Securities and Exchange Commission (SEC) for allegedly releasing inaccurate information to investors, and the company is fully cooperating with the SEC investigation.
After this news was reported, it did not attract much attention in the industry, after all, as early as a month ago, the FF Independent Special Investigation Committee released a report, which said that through the investigation, it was found that there was deception in the number of FF 91 scheduled orders released by FF and Jia Yueting's participation within FF.
FF has embarked on the road of building cars since 2014, although it started very early, but then met the founder Jia Yueting fled the United States, and its first product FF 91 also "jumped tickets" one after another, and the stock price fell endlessly after listing, and now FF has even come to the brink of delisting.
Based on all this fact, what is the likelihood of FF delisting? Will Jia Yueting's dream of building a car suffocate?
1. Financial report of "difficult childbirth" twice
Jia Yueting's dream of building a car is falling.
On 7 April 2022, FF issued an announcement that it had received a notification letter from NASDAQ on 4 April 2022, stating that it had violated Rule 5250(c)(1) of the NASDAQ Listing Rules due to its failure to submit its 10-K annual report as of December 31, 2021 in a timely manner.
It is not surprising that FF will receive this notification. Late last month, FF filed an announcement with the U.S. Securities and Exchange Commission (SEC) titled "Provides Updates on the Status of Applications and Investigations," in which it said it would not be able to submit financial data for the third quarter and full year of 2021 within the allotted time.
As for the reasons, FF said that it was due to the need for additional time to complete the additional investigation work and remedial work of the special committee composed of independent directors of the company, as well as to complete the company's third quarter 2021 financial report and full year 2021 financial report and disclose relevant information.
FF published the "Provides updates on the status of applications and investigations" bulletin, screenshot from the announcement
In the face of the explanation given by FF, Nasdaq Exchange said in the notification letter that if FF fails to submit the third quarter and full year financial report data of last year before May 6, 2022, it will issue a notice of stock delisting to FF.
This announcement, in the industry's view, is an "ultimatum" for FF and Jia Yueting, but FF is also ready to suspend the submission of financial report data, and it also said in the announcement that it has the right to appeal this notice to the NASDAQ hearing team and request that the execution continue to be suspended during the appeal period.
FF will be so indifferent to nasdaq's delisting warning, because this is not the first time it has been warned.
On the evening of July 22 last year, FF officially landed on the NASDAQ exchange under the stock code "FFIE", and Jia Yueting, who had not appeared for a long time, drove FF 91 to the NASDAQ exchange with Bi Fukang on the same day to participate in the listing ceremony.
The listing bell ringing ceremony began on time, and Jia Yueting, who was no longer the CEO, could only applaud with other guests on the stage to witness the important moment when the six FF partners jointly rang the bell.
As the CEO of FF, Bi Fukang said at the listing ceremony, "Today is a new chapter in the history of FF, and it is also a stage achievement of our founder, Mr. Jia Yueting, who created the company's lofty vision and mission in California 7 years ago. ”
At that time, Jia Yueting's mood should also be very excited. The day after FF went public, he not only wrote a long congratulatory post on his personal Weibo, but also believed that "FF 91 will be delivered to users as soon as possible in order to subvert traditional luxury car brands such as Maybach, Ferrari and Bentley." ”
However, the stock market and investors have been very calm about this.
On the day of listing, the FF U.S. stock issue price was $13.78 per share, a pre-market increase of 50%, and finally opened at $16.8 per share, up 22% from the issue price. However, less than half an hour later, FF's intraday share price fell below the issue price, and by the end of the day, the stock price was finally quoted at $13.98 per share, with a total market value of $4.511 billion.
The stock price trend after FF continued the decline on the day of listing. By looking at the trend of its stock price after listing, We can see that it is in a downward trend, and the stock price has slipped from $13.98 / share on the day of listing to the current $4.47 / share; the market value has also fallen from $4.511 billion to $1.45 billion, almost evaporating more than $3 billion.
FF stock price trend since its listing, screenshot from the Tiger Securities APP
This also means that although FF landed on the US stock market, the stock market and investors may not be optimistic about it, and received the first delisting notice only 4 months after FF was listed.
At the end of November last year, FF issued an announcement that it had received a warning notice letter from NASDAQ, in which the latter believed that FF was accused of not complying with nasdaq listing rules due to its failure to submit financial data for the third quarter of the year on time.
In response to this allegation, FF attributed the original attribution of the unsubmitted financial report to the impact of the short report issued by J Capital Research Meiqijin Investment in the same month, and is conducting an independent review of the short report.
In addition, FF also clarified the receipt of the delisting warning notice, arguing that "whether receiving the NASDAQ warning letter means that NASDAQ requires FFIE to delist, this is a wrong interpretation." The NASDAQ warning letter is only related to the delay in filing the Q3 financial report of FF Company, which is a normal procedure. ”
Nasdaq also said in the notification letter at the time that it recommended that FF submit its quarterly report for the quarter ended September 30, 2021 within 60 days, complying with the NASDAQ listing rules, and no later than 180 days.
Facts have proved that as of now, FF not only did not submit the financial report data for the third quarter of last year, but also did not hand over the financial report data for the whole year in time, so that within only 10 months of FF's listing, it received two delisting notices from NASDAQ.
In the industry's view, FF was named twice in a year with two "difficult births" in the financial report data, and even went to the brink of delisting. It should be noted that this is only the "tip of the iceberg" of Jia Yueting and FF's absurdity.
2. Drawing cakes and deception
"FF 91 completes another milestone."
At the end of February this year, at the press conference of FF's quasi-mass production car off the production line, Jia Yueting said publicly. In his view, the roll-off of the FF 91 quasi-production vehicle means that FF has entered the fourth important milestone - the pre-production stage of mass manufacturing for final engineering verification and certification.
Bi Fukang (left) and Jia Yueting, screenshot from the live broadcast of the FF 91 quasi-production car off the production line
In FF's plan, the mass production of FF 91 is divided into seven stages, namely the completion of the installation of equipment to support the production and manufacture of pre-production vehicles; obtaining final use permits to pave the way for pre-production vehicle mass manufacturing; starting the infrastructure construction of the remaining production areas; mass manufacturing of pre-production vehicles for final engineering verification and certification; all mechanical, electrical equipment and piping systems began to operate to support the final equipment installation; completing all infrastructure construction and equipment installation in the main vehicle manufacturing area; and final mass production delivery.
Jia Yueting also said at that time that in the future, FF 91 will conduct further verification and compliance testing before mass production, and it is planned to be put into production in the third quarter of this year and can be provided with test drives in the fourth quarter. In addition to the FF 91, FF's second model, the FF 81, will be manufactured by South Korea's Mingshin Group and is expected to go on sale in 2024.
Although this information was disclosed, Jia Yueting and FF did not mention key information such as how the mass production model differed from the previously released model and what the configuration changed, plus the whole conference was only 20 minutes long, so that the conference at that time was also regarded by the industry as Jia Yueting's cake.
For FF and Jia Yueting, painting cakes has always been "professional".
In January 2017, at the CES show in Las Vegas, FF released its first model, the FF 91, which became the focus of attention in the industry at that time because this model was more prominent than the Tesla Model X at that time.
At that time, Jia Yueting, standing under the magnesium lamp, confidently announced to the outside world: two months later, 300 dream partner versions will be sold, and ordinary consumers can already book the model on the official website, which is expected to be sold and delivered in 2018.
After that, consumers are not waiting for the mass production and listing of FF 91, but the "ticket jumping" of the model again and again, and the continued drawing of the cake after the "ticket jump". For example, after jumping tickets in 2018, Bi Fukang said that he would complete the delivery before September 2020; when FF 91 jumped again in September 2020, FF said that it would arrange the mass production of FF 91 as soon as possible.
Waiting until last year, FF still did not let FF 91 go public, but sent itself to the NASDAQ gate. Perhaps to make the stock price look better at the time of listing, FF continued to draw a pie in its prospectus , saying that it had received more than 14,000 pre-orders for FF 91.
FF listing, image source Faraday Future official micro
Two months after the listing, FF held an event called "Futurism Day", at which the FF China team made its debut, and briefly introduced the production plan of FF 91 and the landing of the headquarters in China.
Although the information revealed at that event showed that the mass production of FF 91 was on the right track, it was ambiguous about the specific production of FF 91 and how to land in China, so that the event was still considered to be the painting cake of FF and Jia Yueting to investors, and Lianxing had explained this in detail in the article "Jia Yueting "Painted Cake" to Investors Again".
It is undeniable that under such a painting cake, the foam created by Jia Yueting and FF has been blown bigger and bigger, although it is crystal clear from the outside, it is difficult to see what is inside the foam.
It wasn't until last November that the bubble began to burst.
That month, an agency called J Capital Research released a 28-page short report in which they argued that FF could not sell even one car. Because according to this agency's investigation, the FF 91 order published by FF may be false and not a real consumer reservation.
In addition, the agency also demonstrated the view that FF could not produce and manufacture FF 91 by visiting factories and investigating the accumulation of technology.
In response to the agency's allegations, Jia Yueting quickly responded on his social platform account that "cold rice is hot and fried, nonsense." Subsequently, FF also announced that it would set up an independent special investigation committee to investigate the allegations in the short report.
After months of investigation, the independent special commission of inquiry had the answer. In February, the team released a report that said the investigation had found certain inconsistencies with the facts in the statements issued by FF investors, as well as certain issues with corporate governance and compliance.
Among them, there are two main places where there are so-called "inconsistencies", one is that "FF has previously announced that there have been 14,000 FF 91 orders", but according to the investigation, "the number of this order may be misleading, because only a few hundred of these orders are paid, and the rest are not paid." ”
Description of order fraud in the investigation report, screenshot from the report
Second, the survey report pointed out that it "underestimated Jia Yueting's participation in FF". As early as 2019, Jia Yueting announced his resignation as CEO of FF and became the CPUO (Chief Product & User Experience Officer) of FF. However, according to the investigation, Jia Yueting has mastered the development of FF by installing relatives within the FF management and has a strong voice within FF.
However, in addition to the above two points, the independent special investigation committee also said that "there is no evidence to corroborate the other allegations mentioned in the short-selling reports submitted by the short-selling agencies before.".
Although an investigation by the independent special investigation committee within FF shows that a large part of the allegations that have been made in the air have no evidence to support, the fact that there is indeed a lie about the volume of FF 91 orders and Jia Yueting's voice within FF.
Since Jia Yueting founded FF in 2014 and started to build cars, it has been 8 years so far, in these 8 years, not only has FF 91 been in the unlisted stage, but also has been drawing cakes and deceiving consumers and the entire industry again and again, and even after the NASDAQ listing, it has been delisted twice due to failure to submit financial reports in time.
After experiencing these, the fate of FF has become a concern for many people in the industry.
3. Will FF be delisted?
The reason why FF chose to go public on a backdoor listing last year is generally believed in the industry to find money in order to save its own predicament.
According to the listing documents filed by FF with the SEC at that time, its net loss for the first quarter of 2019-2021 reached $142 million, $147 million and $76 million, respectively. As of March 31 last year, its cash reserves were only $47.525 million.
After such a data exposure, in the industry's view, the reason why FF 91 will continue to jump tickets may be precisely because FF does not have enough money to support production and manufacturing. Because of this, the lack of money FF also stated in the listing plan that it will raise 1 billion US dollars.
Although it has obtained financing through listing, as far as the current situation is concerned, FF is still very short of money.
According to the data disclosed in FF's latest announcement, in terms of net loss, it expects its full-year loss last year to reach $510 million to $550 million, while the net loss in the same period of 2020 was $147 million, which means that FF's net loss last year expanded by 247% year-on-year.
FF net loss change trend from 2019 to 2021, data from public information, connected travel mapping
In terms of cash reserves, FF expects only $530 million in cash, cash equivalents and restricted cash as of December 21, 2021. Perhaps seeing the fact that FF management said in a recent filing with the SEC that "there are significant doubts about whether FF can continue to operate for another year." ”
In the face of such a situation of FF, in the view of Zhang Junyi, a veteran of the automotive industry, FF should try its best to submit compliance documents and financial report data before the deadline to ensure that it does not delist. After all, if it is delisted, FF will reduce another financing channel to find money, which indirectly creates uncertainty about the debt restructuring and repayment of its founder's history.
But in Zhang Junyi's view, even if FF is not delisted, the challenges after that are also very large.
For FF, if you want to change your own predicament, you still have to rely on its products to get sales, but as far as the current FF financial situation is concerned, let alone get sales after listing, even the mass production after listing may be difficult to achieve.
Coupled with labor costs, shortages and prices of raw materials such as batteries and chips, as well as other macroeconomic challenges such as tariffs and supply chain restrictions, the FF 91 project will certainly add some costs, and these increased costs will be worse for the lack of money FF.
In addition, even if the FF 91 can achieve mass production, its weak brand power will be difficult to support sales.
Although Jia Yueting and FF have repeatedly equated the positioning of FF with ultra-luxury car brands such as Maybach and Ferrari in public, they have also seen the same narrative on FF's official website. However, in Zhang Junyi's view, FF is difficult to compare with brands such as Maybach and Ferrari, after all, the latter brands have been developing for hundreds of years, while FF is only a few years, far from the accumulation of such ultra-luxury brands.
Image source Faraday Future official micro
In addition to the lack of money to build a car and the weak brand power, after repeated unfulfilled paintings and deceptions, the credibility of FF and Jia Yueting is also rapidly diluted.
Wired Travel asked a number of industry analysts and investors about their views on FF, and the answer was basically the same - many people no longer believe that FF can build cars and FF 91 can achieve mass production delivery, and some investors said that not many people in the capital market pay attention to the FF project.
Wired Travel has also discussed topics such as "how many people still believe in FF and Jia Yueting" in many articles, and the answers are similar - whether it is the consumer market, the automotive industry, or the investment circle, almost many people choose to believe FF and Jia Yueting.
For now, although it is necessary to determine whether FF will eventually be delisted by Nasdaq, it also depends on whether FF can hand over the third quarter and full year of last year's financial report data next month. But it is conceivable that even if it can be handed over, the data reported by the financial report will not be too good, and the plight of FF will continue to continue, and Jia Yueting's hope of building a car dream is becoming more and more dim.
(The header image of this article is from the official micro of FaradayFuture.) ）