Faraday's future market value plummeted by more than 80% Jia Yueting's entrepreneurship failed?

The new FF car, which has been exhibited many times, has not yet been mass-produced. Figure/IC photo

Faraday Future seems to be irresistibly sliding into the "abyss".

At 10:30 p.m. Beijing time on April 26, Faraday Future investors may have mixed feelings. Faraday Future shares were circuited twice, falling 41.29% at one point. As of the morning close on April 27, Faraday Future's share price was $3.10, down 12.92% and its market capitalization was only $1.006 billion.

On July 22, 2021, Faraday Future went public on nasdaq bell-ringing, opening at $16.8 with a market capitalization of nearly $6 billion. But looking back a few months later, this is already the commanding height of Faraday's future market capitalization. Compared to the moment of the opening, Faraday Future's market value has fallen by 83%.

Why did Faraday Future's stock price plummet on this day?

On the news side, faraday's last announcement for the future was on April 14. The announcement revealed at the time that Jia Yueting would not continue to serve as Faraday's future executive.

With a net loss expected to peak at $550 million in 2021, a delay in the listing of a new car, and Jia Yueting stepping down as an executive, is there a future for Faraday, which is constantly "negative"?

The market value fell by 80%, only because the "soul figure" Jia Yueting left?

For a long time, Jia Yueting can be called the "soul figure" of Faraday's future.

In 2004, Jia Yueting founded LeTV Information Technology Co., Ltd. In 2011, Jia Yueting created LeTV Holdings Co., Ltd., which became known as LeTV. At that time, LeEco was an interconnected technology company with business segments including smartphones, smart TVs, smart cars, connected sports, video content, connected finance, and cloud computing.

In 2014, Jia Yueting created FF and served as the executive officer of the seat.

In September 2019, LeEco said that the company received an administrative penalty and a prior notice of market ban issued by the CSRC, and the target of the CSRC's proposed punishment this time includes Jia Yueting (lifetime securities market ban and a fine of 241 million yuan) and some of the company's directors, supervisors, senior management and other personnel.

In October 2019, Jia Yueting filed for bankruptcy protection with the Delaware Bankruptcy Court under the U.S. Bankruptcy Law, which was subsequently transferred to the U.S. Central Bankruptcy Court. Jia Yueting provided guarantees or loans to other businesses created in China to file for bankruptcy.

It is understood that in June 2020, Jia Yueting completed the Chapter 11 restructuring plan on his debts and claims, and received a discharge order in 2021344, with a release order effective 23, 2021.

By the time of going public, Jia Yueting, as FF's founder, seat product and household systems officer, was responsible for overseeing product innovation, strategy and definition activities; connectivity, intelligent and dynamic driving; household experience, household acquisition and household operations.

However, Jia Yueting's voice in Faraday's future has been decreasing.

According to the U.S. Securities and Exchange Commission (SEC) disclosure documents on April 14, the company's founder Jia Yueting will continue to serve as the company's chief product and user ecology officer and will continue to report to the executive chairman. But Jia's responsibilities will be limited to the product and mobile ecosystems as well as the Internet, artificial intelligence and advanced research and development technologies, and he will no longer serve as an executive.

Delay in launching new cars: When will the first model priced at 1.16 million arrive?

Faraday's future turnaround is closely linked to a short report.

On October 7, 2021, J Capital Research, a well-known short-selling agency in the United States, released a short-selling report on FF companies, questioning FF's vehicle orders, factory construction commitments, financial data, and management team.

Short-selling agencies assert that Faraday Future cannot sell a single car and expect the company to face a massive sell-off. This conclusion comes from its extensive field visits, combined with analysis of financial data and executive management capabilities.

No matter how Jia Yueting tells the story, in the final analysis, Faraday Future is a car company, and it will eventually produce cars. The short-selling agency asserted that Faraday Future "violated the commitment of 5 factories to build, and the construction of the sixth factory was repeatedly postponed, and it is uncertain whether it can be successfully built", pointing directly to the company's core business.

FF plans to produce three models, namely the FF91, FF81 and FF71. Among them, FF91 is planned to be launched within 12 months.

From the perspective of positioning, the FF 91 series focuses on the luxury car market, comparing competitors such as Maybach, Bentley, Lamborghini, Ferrari, Porsche, BMW 7 series and so on. The FF 91 Futurist starts at US$180,000 and contracts at RMB1,164,000.

The first vehicle of the FF81 series FF will be a mass-market electric vehicle, positioned to compete with Tesla Model S and Model X, NIO ES8, BMW 5 series and similar vehicles. The cross-model shared throughput parts of the FF 81 and FF91 create economies of scale and reduce costs. The FF 81 Futurist starts at US$95,000 and contracts at RMB614,000.

The FF 71 series is FF's crowd-market vehicle, integrating connectivity and advanced technology into a larger vehicle ruler and positioning itself to compete with tesla Model 3 and Model Y, BMW 3 series and similar vehicles. The list price of FF 71 Futurist starts at US$65,000 and contracts are RMB420,300.

But now, whether investors can wait for Faraday's future car has become unknown.

It is expected to turn a profit in 2023, can investors see the future?

It is clear that the troubles facing Faraday's future are all-encompassing.

Previously, the successful listing of FF was believed to be able to rescue Jia Yueting from the mud. However, FF, which is difficult to produce cars, has been in a state of loss, and this state will continue for several years.

According to the prospectus, in 2019, FF had a net loss of $142 million, and in 2020, FF's net loss expanded to $147 million.

According to the prospectus forecast, FF expects to achieve revenue of $504 million in 2022, $4.038 billion in 2023, $10.555 billion in 2024 and $21.445 billion in 2025. If it is predicted, in 2024, FF's earnings can turn a profit.

"For the foreseeable future, FF will depend on the receipt of single-model production", the prospectus shows that the success of FF will initially depend to a large extent on the future sales and success of the FF 91 series. FF expects the FF 91 series to become its only model on the market in the near future.

If FF postpones the launch of the FF 91 series, potential consumers may lose faith in FF, and customers who have placed orders may cancel orders, which may weaken FF's growth prospects. In addition, FF's competition against FF may enter the market faster, which may affect FF's ability to increase its market share.

These words in the prospectus are a slur, and as of now, the listing of FF's new car is still far away. According to Faraday Future's recent announcement, the company expects a net loss of $510 million to $550 million for the full year 2021, and "the company expects to continue to generate significant operating losses for the foreseeable future."

Beijing News shell financial reporter Lin Zi Editor Xu Chao Proofreader Yang Xuli