FFIE Stock Alert: Faraday Future plans to split stocks

Faraday future (NASDAQ:FFI) shares fall after the electric vehicle (EV) company proposed a reverse stock split between 1:2 and 1:40 to comply with Nasdaq Minimum bid requirement. Faraday added that it would not conduct a reverse split if its shares were able to naturally return to the minimum bid requirement.

“The final ratio will be determined by the board of directors following shareholder approval, with the option to cancel, delay or defer the reverse stock split,” Faraday said.

To regain compliance, the closing price of FFIE stock must be at or above $1 for at least 10 consecutive trading days, but generally not more than 20 consecutive trading days.

In December, FFIE closed below $1 for 30 consecutive trading days, prompting a deficiency notice with Nasdaq. Faraday also filed its 2023 annual report late, while its shares closed below 10 cents for 10 consecutive trading days. These two deficiency marks serve as additional basis for Nasdaq to delist the shares. Faraday has since filed its annual report and plans to file its first-quarter Form 10-Q by July and its second-quarter Form 10-Q on time.

FFIE share: Faraday proposes reverse stock split of up to 1:40

Faraday has requested an August 30 deadline to reinstate the minimum bid requirement. The company wants its shares to trade for at least $5 after a potential reverse split.

Nasdaq offered Faraday the opportunity to request a hearing before the Nasdaq Hearings Panel to communicate its plan to restore compliance, which Faraday did. FFIE will remain listed on the exchange while it awaits a response.

Faraday, meanwhile, is also looking to increase its authorized shares, which would be dilutive if additional shares were issued. The company added that its efforts to obtain financing from the Middle East were limited by the size of its authorized shares. The exact amount of the proposed increase was not disclosed.

More authorized shares would enable the company to “better pursue equity-based and equity-linked strategic financings.”

At Faraday’s annual general meeting scheduled for July, both a reverse stock split and an increase in authorized shares will be voted on.

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At the time of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com Publishing guidelines.