What happened

Shares of Faraday Future Intelligent Electric (FFIE -6.14%) surged 50% in July, according to data provided by S&P Global Market Intelligence.

Faraday Future is manufacturing luxury electric cars and calls itself "the disruptor of the traditional ultra-luxury car civilization epitomized by Ferrari and Maybach." Yet the start-up has struggled to stay afloat, and the lack of funds has consistently hit its production.

In July though, Faraday Future provided a crucial update about production and deliveries and followed it up with more details earlier this month, and that kept the markets buzzing on the EV stock.

So what

Last month, Faraday Future said it had identified some errors in its previously released financial statements related to some noncash and nonoperating items, and that it will therefore file "restated" financial statements for the quarters that ended Sept. 30, 2022 and March 31, 2023 and for the year that ended Dec. 31, 2022.

But it was something else the company said that sent its stock flying.

In a regulatory filing from mid-July, Faraday Future said it is on track to deliver its first EV, the FF 91 2.0 Futurist Alliance, in August. It's a limited edition trim priced at a meaty $309,000. Faraday Future calls the FF 91 2.0 Futurist Alliance the first "all-ability aiHypercar," as it uses artificial intelligence (AI), and Faraday Future claims it will combine the performance, comfort, and space of a sedan, supercar, and SUV.

Faraday Future also reiterated its long-term growth plans, dividing them broadly into three phases. In phase 1, it'll focus on delivering the FF 91 2.0 Futurist Alliance, the FF 91 2.0 Futurist, and the FF 91 2.0 cars. In phase 2, the company plans to introduce new models, grow its smart device sales, and further target sustainable revenue growth in phase 3.

On August 1, Faraday Future said it had completed all the compliance testing for the FF 91 2.0 Futurist Alliance and confirmed it will deliver its first EV in mid-August.

Now what

With Faraday Future now closer to generating its first sales and revenue, the beleaguered EV stock has unsurprisingly caught the market's attention. Yet, there's a lot to prove yet, especially with the steep price tags that Faraday Future's EVs carry in a highly competitive market. Moreover, there's another reason the EV stock jumped in recent weeks, and it has nothing to do with the company's operations.

Faraday Future is planning a reverse stock split, which if approved and implemented will effectively decrease the company's outstanding share count and increase the stock's price proportionally to keep its market capitalization unchanged. Of course, the move is to avoid delisting from the Nasdaq stock exchange, and that's no reason to celebrate. Yet that's also how the markets work -- they never sleep on a chance to speculate and bet on a beleaguered stock, hoping it will rally, even if there's no change in the underlying weak fundamentals of the company.