On June 24th local time, Faraday Future (& quot;FaradayFuture " Or& FF announced that its board of directors has approved a series of proposals, including the implementation of a reverse stock split (reduction) of the company's common stock, which will be submitted to shareholders for approval at the upcoming annual general meeting.
It is understood that reverse stock split refers to reducing the number of issued shares of a company to a small number of shares, while keeping the proportion of shares held by shareholders unchanged, and will not cause losses to shareholders. Usually only appears when the stock price is low. This action will raise the nominal price of stocks, but it will not affect their value.
Shrinking stocks to boost stock prices
FF stated that in order to ensure full compliance with NASDAQ requirements, a series of measures have been taken to restore compliance, including submitting the 2023 annual financial report 10-K file at the end of May, hiring a new independent auditing firm, submitting a preliminary power of attorney containing a reverse stock split proposal, and committing to submit the first quarter financial report 10-Q file by the end of July. In addition, the company plans to submit its second quarter 10-Q financial report on time.
FF stated that if the company resumes compliance in its public documents, the only current issue of non-compliance with NASDAQ will be the company's low stock price. For the benefit of all FF shareholders, FF hopes that the company will maintain its listed status. The proposed reverse stock split aims to increase the market price of the company's common stock to mitigate the risk of delisting from the NASDAQ capital market.
According to the proposal, the total number of issued and authorized common shares of the existing FF shall be subject to a proportional reverse division authorization within the range of 1:2 to 1:40. The final proportion will be decided by the board of directors after shareholder approval, and the board of directors has the right to choose to abandon, delay or postpone the reverse stock split.
It is worth noting that in order to continue advancing strategic financing, including from the Middle East, there are limitations due to insufficient available authorized stocks. The FF board of directors has approved a proposal in a series of proposals that will be submitted to shareholders for approval at the upcoming annual general meeting to amend the company's articles of association and allow for an increase in the number of authorized shares to be issued.
The delisting crisis of FF
As early as December 28, 2023, NASDAQ notified FF that its stock had closed below $1.00 per share for 30 consecutive trading days, which did not comply with NASDAQ's listing rules and required it to return to compliance within 180 days (i.e. no later than June 25, 2024).
On April 18, 2024, NASDAQ notified FF that it had not submitted its 10-K annual report as of December 31, 2023 in a timely manner, which did not comply with NASDAQ's listing rules.
On April 26th, FF stated that the company received a letter from NASDAQ on April 24th stating that due to the company's stock closing price being below $0.10 for ten consecutive trading days, which does not comply with NASDAQ listing rules, NASDAQ staff gave their opinion on the company's securities exiting the NASDAQ capital market; quot;）。
Currently, FF has requested Nasdaq to extend the deadline for restoring stock price compliance until August 30, 2024, and informed the Nasdaq hearing team that the company's goal is to achieve a stock price of at least $5 per share after reverse stock split. If the stock price naturally reaches this threshold, the board of directors may choose to postpone or not implement a reverse stock split.
The reporter noticed that as of June 24th, the closing price of FF was 0.326 US dollars per share, requiring 16 shares to be combined with 1 share to exceed 5 US dollars per share.
It is worth mentioning that in mid May, FF's stock price once reached $3.9 per share, as Jia Yueting had publicly stated that he would consider co serving with FF's global CEO Matthias as the company's co CEO. In addition, he also announced, "I have made a indecisive decision that is not in line with my personal pursuit. I will start commercializing my personal IP and make some money as soon as possible. Part of it will be used to pay off debts and the other part will be used to save the company, to supplement car manufacturing. I will strive to support FF's basic operations and give investors and shareholders confidence."