Global shared intelligent mobility ecosystem company Faraday Future Intelligent Electric Inc. (FFIE), which is headquartered in Los Angeles, made its stock market debut on July 22, 2021, merging with special purpose acquisition company (SPAC) Property Solutions Acquisition Corp.  FFIE added $1 billion to its cash supply through the transaction. However, the stock declined 1.8% in price on its first trading day to close the trading session at $13.53.

Furthermore, the stock has retreated 8.1% in price over the past month to close its last trading session at $8.23. In addition, several investigations are being conducted regarding the company’s forecasts, which some observers suspect are overblown.

The ongoing semiconductor shortage and intense competition in the EV space also make FFIE’s near-term prospects bleak.

Click here to checkout our Electric Vehicle Industry Report for 2021

Here are the factors that we think could influence FFIE’s performance in the coming months:

Questionable Reputation

FFIE was expected to be a leader in the electric vehicles industry with its groundbreaking FF 91 crossover, which would usher in an “entirely new species” of automobile. But the executives that made those proclamations have left the company. The company abandoned a plan for a $1 billion factory in Nevada and has yet to produce any vehicle. Its founder and CEO, Chinese billionaire Jia “YT” Yueting, also filed for bankruptcy in 2019.

Ongoing Investigations

Several law firms have launched an investigation against FFIE and certain of its officers and/or directors on concerns over securities fraud or other unlawful business practices. It is alleged that the company is unlikely ever to sell a car to a consumer. For example, it is alleged that its claimed 14,000 deposits are fabricated because 78% of these reservations were made by a single undisclosed company that is likely an affiliate.

POWR Ratings Reflect Bleak Prospects

FFIE has an overall D rating, which equates to Sell in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight different categories. FFIE has an F grade for Growth. This is justified because analysts expect its EPS to decline by 133.6% in its fiscal year ending December 31, 2022. Furthermore, its EPS is expected to remain negative in fiscal 2021 and 2022.

In addition, FFIE has a D grade for Quality. This is justified given its negative value for trailing-12-month ROTA versus the 6.28% industry average. Also, FFIE has an F grade for Value.

We’ve also rated FFIE for Stability, Momentum, and Sentiment in addition to the POWR Rating grades I’ve just highlighted. Click here to get all the FFIE ratings.

Moreover, FFIE is ranked #54 of 64 stocks in the Auto & Vehicle Manufacturers industry.

Bottom Line

Several investigations are ongoing against FFIE. In addition, it faces stiff competition in this overcrowded EV market. Also, it has yet to produce a single unit. So, we think the stock is best avoided now.

How Does Faraday Future (FFIE) Stack Up Against its Peers?

While FFIE has an overall POWR Rating of D, one  might want to consider investing in the following Auto & Vehicle Manufacturers stocks with an A (Strong Buy) rating: Suzuki Motor Corporation (SZKMY), Bayerische Motoren Werke Aktiengesellschaft (BMWYY), and Isuzu Motors Limited (ISUZY).

Click here to checkout our Electric Vehicle Industry Report for 2021

FFIE shares were trading at $7.95 per share on Tuesday afternoon, down $0.28 (-3.40%). Year-to-date, FFIE has declined -20.50%, versus a 17.29% rise in the benchmark S&P 500 index during the same period.

About the Author: Nimesh Jaiswal

Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles. More...

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