Faraday Future's stock price soared 27 times, Jia Yueting is expected to return to China?

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2024-05-18 00:53Published in Guangdong

The law of change in the stock market is really incomprehensible when the gods come, and Hengchi Automobile, which has been "dead" in the eyes of ordinary netizens, actually soared 53.23% in Hong Kong stocks on May 17. What's even more outrageous is Faraday Future (hereinafter referred to as "FF"), whose stock price soared more than 20 times in three days, from a bear stock that was about to be forcibly delisted, to a bull stock that made investors blush.

Stock market data shows that at the close of trading on May 13, the value of FF's stock was only $0.061 per share, but it has soared to $1.650 per share at the close of trading on May 16, and in just three days from May 14 to 16, the value of FF's stock has risen to 27 times, and the market value of FF has also risen to $70.41 million.

The risk of the stock market is extremely high, and it is normal for all kinds of stocks to rise and fall, but FF stocks have been in a downturn for a long time, and even received a delisting warning from Nasdaq because the stock price has been below $1 per share for 30 consecutive trading days and $0.1 per share for 10 consecutive trading days.

Xiaotong once believed that FF would adopt a reverse equity split, increase the value of each share through a merger, and force the listing to continue its life. To everyone's surprise, FF's stock price miraculously rebounded sharply. There is always a reason for everything, and there must be a reason behind the sudden surge in the stock price of FF, which has been silent for a long time.

The stock price has recovered, and Jia Yueting has contributed a lot

There are two main views in the industry as to why FF's stock price has soared, first, FF is currently the only Chinese-backed electric vehicle concept stock that has developed locally in the United States, and it may be the only Chinese automotive concept stock that will not be affected by the relevant ban. Even Jia Yueting himself said that FF has unique characteristics in building a Sino-US automobile bridge.

On May 14, Biden announced that he would impose heavy taxes on electric vehicles, semiconductors, batteries, solar cells, and steel and aluminum products imported from China, of which the tariffs on electric vehicles would be increased from 25% to 100%. This move will undoubtedly cause serious obstacles to the export of Chinese electric vehicles to the United States, while FFs in the United States will not be affected by the ban.

Because of this, FF can play a role in helping Chinese automakers and supply chains enter the U.S. market. In addition, China's electric vehicle industry is developing rapidly, and some fields have achieved technological leadership over overseas car companies, which will inevitably make overseas investors look at Chinese car companies highly. FF, which has a Chinese background, can only achieve a soaring stock price with the help of the implementation of new regulations and the sales and technical advantages of domestic electric vehicles.

The second is Jia Yueting's re-appointment as FF co-CEO, as well as the commercialization of personal IP, which has regained the confidence of some investors. After several rounds of internal competition, Jia Yueting gradually faded out of FF management, and only retained the title of chief product and user ecology officer.

On May 7, Jia Yueting posted on Weibo that in order to save FF, he will serve as co-CEO and start the commercialization of personal IP to make money to pay off debts and build cars. Based on the estimation of the impact of his personal IP, investors' predictions of FF's development trend have improved, which is reflected in the stock price.

The rise in stock price represents investors' views on the company's future development, but even Warren Buffett, the stock god, has a time when he looks away, and FF, whose stock price has soared 27 times in 3 days, has grasped the hope of a comeback, or is it a dying struggle?

Faraday Future, can it regain its future?

Although he has long since left China, Jia Yueting is still extremely concerned about domestic car companies and Internet trends, and has repeatedly published violent comments on Weibo to ridicule domestic car companies, such as angrily spraying Gaohe Auto as a plagiarist, complaining that Xiaomi Auto is a "follower" and lacks original spirit, etc., and its success depends on the advantages of the domestic supply chain.

The recent explosion of Jia Yueting is actually related to Zhou Hongyi, a new Internet celebrity in the domestic car circle. Previously, Zhou Hongyi complained that Accountant Jia (Jia Yueting) couldn't build a car after going to the United States for so many years, and he actually wanted to sue Gaohe Automobile in turn. Later, Zhou Hongyi called Jia Yueting to return to China to build cars, and the cost of the domestic supply chain is low.

Jia Yueting took this opportunity to build himself as a bridge between the Chinese and American auto businesses and elevate his identity. I have to say that this wave of marketing is very level, and it has also successfully pulled FF stocks up, but in the long run, FF's stock rally is difficult to last.

First of all, we must know that it is an objective fact that the production cost of automobiles in the United States is higher than that in China, and there are consortia in the United States that control the huge oil system, and they are opposed to new energy vehicles. Although in the past, some consortiums that closely followed the trend of science and technology and agreed with the new energy vehicle system insisted on investing in new energy vehicles, the United States does not have the soil suitable for the growth of new energy vehicles.

It can be seen from the performance of the new American car-making forces that car companies such as Fisker, Rivian and Lucid have been dubbed "Tesla killers" and "Tesla's biggest challenger", but none of them have met investors' expectations until today. Among them, Fisker was forcibly delisted from the New York Stock Exchange some time ago because its stock price was below $1 per share for a long time, and its stock price shrank by 99% compared with its peak.

Second, the stock price of car companies needs to be based on product sales, so that investors can see the hope that the company will bring them profits. FF hasn't seen any movement since delivering 11 FF91s last year, one of which is Jia Yueting's, and it is likely that it will not have the capacity to mass-produce cars.

As for Jia Yueting's "Sino-US automobile bridge", it is the core of his fooling investors, and the "Sino-US automobile bridge" has unlimited room for reverie, Jia Yueting himself also revealed that there are institutions seeking cooperation with FF, hoping to help Chinese car companies open up the US market with the help of FF.

But the U.S. won't give Chinese automakers too many opportunities to exploit loopholes, and may allow Chinese automakers and suppliers to sell products in the U.S., but only if they build factories in the U.S. to provide jobs and pay taxes for locals, such as the automotive glass giant Fuyao Group. As a result, even if domestic car companies use FF as a springboard to enter the U.S. market, it will be difficult to reduce production costs and make it difficult for their business to achieve profitability.

From FF gaining a lot of investment after gaining a foothold in the United States, to now there are still American investors who believe in the saying of "Sino-US automobile bridge", Xiaotong can only sigh that Jia Yueting's eloquence is really good, but no matter how good his eloquence is, it can't help FF build a car out of thin air, all he can do is help him harvest American investors.

Faraday Future after the heat has passed, and he has to work hard to survive

Jia Yueting once said on Weibo that it is his biggest dream to repay his debts and return to China as soon as possible, but given the current situation, it may be difficult for him to have the opportunity to return to China.

One of the key reasons why FF has been able to persist until now is that Jia Yueting transferred high-quality assets to his ex-wife and children through a trust before applying for personal bankruptcy reorganization, and only FF's equity is left. Therefore, the creditors were tied to a boat by Jia Yueting, and only when FF's situation improved, could they have a chance to get back the money they lent.

No matter how bad FF's performance is, it is not Jia Yueting who is most anxious, but other creditors. Even if the creditors have long hated Jia Yueting, they have to hope that FF can reverse the situation in a desperate situation, and the soaring stock price of FF may also be the reason for their fuel.

However, without the support of car sales, it is difficult to have much effect on the stock trend and development of FF by relying only on the slogan of "Sino-US Auto Bridge" and his personal IP. After this wave of enthusiasm has passed, FF stocks are likely to return to a downward trend.

More critically, FF's financial report shows that FF's loss in the third quarter of fiscal year 2023 reached $78.046 million, and its cash reserves were $8.567 million. This amount of money is tantamount to a drop in the bucket for car building, and it makes people doubt that FF will be able to survive 2024.

Previously, due to debt problems, FF had sold its Los Angeles headquarters building and converted it to a leased office. FF, which has experienced several twists and turns, was originally only one step away from delisting, and now the stock price has risen, just to save it from forced delisting. Unless FF is able to secure multiple financings to address its immediate needs, it is only a matter of time before it goes bankrupt.

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