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Faraday Future warns it may not be able to deliver its luxury EV

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Summary

Electric vehicle startup-gone-SPAC Faraday Future has raised a going concern warning, per regulatory filings. The company said it has substantial doubt as to whether it would be able to continue operating over the next year, adding that it is uncertain when it will dispatch first deliveries of its FF 91 luxury EVs. As of November 17, Faraday has 369 preorders, down from 399 refundable, non-binding, paid deposits it had as of June 30, according to the company. Top of the list of concerns is whether Faraday will be able to secure the funds it needs to make it through the year, much less make it to first deliveries. Last week, Faraday got a potential $350 million lifeline to help it launch its vehicle when it signed a financing deal with Yorkville Advisors Global. The equity line of credit includes an initial commitment of $200 million from the investment firm. However, it seems the access to eventual liquidity is not enough to keep Faraday out of hot water in the near term. Per Monday’s filing, Faraday “projects that it may require additional funds during the remainder of 2022 and will require additional funds beyond 2022 in order to continue operations and support the ramp-up of production of the FF 91 to generate revenues to put the Company on a path to cash flow break-even.” Since Faraday was founded, the company has incurred total losses from operations, negative cash flows from operating activities and has an accumulated deficit of $3.3 billion. The startup closed out the third quarter with $31.76 million in cash, down from $121 million at the end of last year. Net losses for the quarter total $103.4 million, which is about a third of the losses reported in Q3 2021. Faraday’s stock is down 6.79% today and over 94% this year. The company has been battling controversies since going public through a merger with Property Solutions Acquisition Corp. in July 2021. Months after its debut, a short seller report by J Capital alleged that Faraday had made a number of inaccurate statements. An internal probe followed, prompting the company to restructure its board, cut the pay of two top executives and suspend at least one other.

Q&As

What is the primary concern for electric vehicle startup-gone-SPAC Faraday Future?
The primary concern for electric vehicle startup-gone-SPAC Faraday Future is that it may not have enough money to continue operating over the next year.

How many preorders does Faraday have as of November 17?
As of November 17, Faraday has 369 preorders.

Why might first deliveries of the company's luxury EVs be delayed?
First deliveries of the company's luxury EVs may be delayed due to supply chain issues, lack of money, and other conditions.

How much money has Faraday Future lost since it was founded?
Since it was founded, Faraday Future has incurred total losses from operations, negative cash flows from operating activities, and has an accumulated deficit of $3.3 billion.

What actions has the company taken in response to an internal probe revealing inaccurate statements made to investors?
In response to an internal probe revealing inaccurate statements made to investors, the company has restructured its board, cut the pay of two top executives, and suspended at least one other.

AI Comments

👍 Despite the challenges faced by the company, it is good to see that they are committed to delivering on their promises.

👎 It is concerning that the company is facing so many financial and operational challenges. It is unclear if they will be able to deliver on their promises.

AI Discussion

Me: It's about Faraday Future, an electric vehicle startup that has raised a going concern warning, per regulatory filings.

Friend: Oh, that's not good.

Me: No, it's not. The company said it has substantial doubt as to whether it would be able to continue operating over the next year, adding that it is uncertain when it will dispatch first deliveries of its FF 91 luxury EVs.

Friend: That's really not good. Do they have any plans to try and turn things around?

Me: They're trying to secure funding, but it's unclear if that will be enough. They're also facing some other challenges, like supply chain issues and a lack of money.

Action items

Follow Faraday Future's progress to see if the company is able to overcome its current challenges and deliver its luxury EV.
If you are considering investing in Faraday Future, closely monitor the company's financial situation and progress.
Stay up to date on electric vehicle technology and advancements to see if Faraday Future's FF 91 is still a competitive option.

Technical terms

Going concern warning: a warning that a company may not be able to continue operating in the near future
SPAC: a special purpose acquisition company, a type of investment vehicle
FF 91: Faraday Future's luxury electric vehicle
Preorders: orders for a product that has not yet been released
Headcount reductions: reductions in the number of employees
Equity line of credit: a line of credit that is backed by the borrower's equity in their property
J Capital: a short seller that alleged that Faraday had made a number of inaccurate statements
U.S. Securities and Exchange Commission: a government agency that regulates the securities industry