Faraday Future (FFIE 74.76%) has repeatedly disappointed investors since its public debut last July. The maker of electric SUVs went public by merging with a special purpose acquisition company (SPAC), and it initially told investors it could ship its first vehicle, the FF 91 Futurist, in the first quarter of 2022. After missing that deadline, it postponed its launch to the second half of 2022. On Dec. 15, it pushed that target back again to March 2023.

All those broken promises, along with investigations by the Securities and Exchange Commission and the Department of Justice, caused Faraday's stock to plummet more than 90% over the past 12 months. Its stock has also remained below $1 per share for more than three months, which greatly increases the risk of it being delisted before its first vehicle even arrives.

Faraday Future's FF 91 Futurist SUV.

Image source: Faraday Future.

Faced with all these challenges, it might seem like Faraday Future doesn't have much of a future. However, some contrarian investors believe it could still make a comeback if it gets its house in order. Let's see if two recent developments -- a green flag and a red flag -- will tilt the scales in favor of the bulls or the bears.

The green flag: Big management changes

Faraday recently underwent a huge executive shakeup. Its board ousted CEO Carsten Breitfeld in late November, replacing the embattled leader with Xuefeng "XF" Chen, and removed Executive Chairperson Sue Swenson, who had been accused of pushing Faraday to pursue bankruptcy and restructuring proceedings.

Product Chief Robert Kruse also resigned and was replaced by Matthias Aydt, who had previously led Faraday's Product Definition & Eco Mobile Systems and Business Development divisions. Aydt worked at the Chinese automaker Qoros Auto prior to joining Faraday. Two other executives, Xiao Ma and Xiaoyang Ning, took over Adyt's former positions in the Product Definition & Eco Mobile Systems and Business Development divisions, respectively.

XF Chen, who had worked at several top automakers prior to joining Faraday, said those leadership changes will ensure that the company's "core departments retain experienced and competent leadership" as it prepares to start mass producing its FF 91 SUVs. That shakeup doesn't guarantee Faraday's survival, but it might be a green flag for hopeful investors.

The red flag: A new funding round

After taking over, XF Chen bumped the launch date of the FF 91 Futurist to next March and estimated its first deliveries would start in April. That announcement wasn't too surprising, but the company also revealed that it needed to secure another $150 million-$170 million in funding to achieve that goal.

At the end of November, Faraday only had $22.5 million in cash left, compared to $31.8 million at the end of the third quarter. That's a bleak situation for a company that posted a net loss of $389.2 million in the first nine months of 2022 without generating any meaningful revenue. Faraday also ended the third quarter with $253.4 million in total liabilities, but its debt-to-equity ratio of 0.9 still looked manageable compared to other EV makers. Lucid and Nikola both ended their latest quarters with debt-to-equity ratios of about 1.1. However, Lucid and Nikola have both started delivering vehicles -- while Faraday remains stalled out at the starting line.

If Faraday actually raises $170 million in new funding, its debt-to-equity ratio will likely rise to 1.7. That high leverage, along with its ongoing losses and track record of broken promises, will likely prevent any serious investors from returning.

Faraday Future is still in serious trouble

Investors should recall that Faraday was founded back in 2014, and that it originally planned to ship its first vehicles in 2017. It was also teetering on the brink of bankruptcy before it was saved by a SPAC. That rocky history, along with its post-merger mistakes, suggests that the company could easily miss its new production goals next year as the macro headwinds intensify.

It will also be tough to secure new financing at favorable rates in this market after so many other SPAC-backed EV makers have flopped. So for now, investors should stay far away from this unstable company.