FFIE Stock Alert: Faraday Future withdraws its production outlook

The ride may be over for Faraday Future Intelligent Electric (NASDAQ:FFI). After FFIE stock rose to unexpected highs earlier this month on short-squeeze momentum, the micro-cap electric vehicle (EV) maker is back below the $1 mark today.

After the market closed yesterday, the company reported worse-than-expected results for the fourth quarter of 2023. It certainly doesn’t look good that Faraday Future missed Wall Street’s revenue estimates, reporting just $800,000, down from the already low forecast of $2.59 million. But perhaps more concerning is the fact that the automaker withdrew its production forecast for the year, sending FFIE stock lower.

Some may see this as a poor reflection of the EV market. But the production outlook announcement is a company-specific catalyst and says more about Faraday Future than the sector as a whole. Specifically, it says FFIE stock is in trouble and will likely continue to fall in the coming weeks.

What happens to FFIE shares?

Since the market opened today, FFIE stock has been on a downward trajectory. At the time of writing, it is down more than 42% and shows no signs of recovering. With shares trading at 67 cents after closing yesterday at over $1.10, the company’s future looks highly questionable. The meme stock hype is over and short squeeze speculation appears to have died down, leaving FFIE stock with the same bleak outlook it had before the rally began.

Why did Faraday Future withdraw its production outlook? The company says it is due to volatile market conditions and current financing issues. However, the latter is likely to be a much bigger problem than the former. Even in a strong market, the EV maker would still be struggling with company-specific issues. The Wall Street Journal Reports:

“The news from Faraday Future Intelligent Electric comes about six months after the company announced it was aiming to reach phase three of electric vehicle deliveries to the general market by the end of the first quarter, and three months after the company said it was “prioritizing cash flow breakeven over volume to avoid scaling up production too quickly.”

It is true that Faraday is not the only small-cap automaker to scale back its production outlook. Almost two months ago, the also-struggling EV producer Fisherman (OTCQB:FSRN) did the same, a decision that accelerated the downward trend. Experts have suggested that Faraday will likely follow Fisker’s path, which will likely lead directly to a clip. The company’s recent production news further bolsters that argument.

The dark path ahead

When FFIE stock soared earlier this month, investors wondered if a turnaround could actually happen. While Faraday remained the undisputed winner of the meme stock rally, today’s news should serve as an important reminder to investors.

At its core, FFIE is nothing more than a meme stock, and not even a strong one. The most likely scenario is that the struggling company continues its path to becoming the next Fisker. That’s not a stock anyone should want.

At the time of publication, Samuel O’Brient had no position (either directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com’s disclosure policies.