What happened
On Friday, beleaguered specialty electric vehicle (EV) maker Faraday Future Intelligent Electric (FFIE -4.08%) was about to pull off a major piece of financial engineering. In line with its stated plans, and in accordance with a recent shareholder vote, it scheduled a reverse stock split for later that afternoon.
A reverse stock split is largely seen as a desperation move by a company in poor financial circumstances. Not surprisingly, investors traded Faraday stock down sharply on the news. The company's share price was nearly 16% in the red in late-session trading.
So what
Faraday, one of the companies occupying the luxury niche of the EV market, said on Friday that it will engineer that reverse stock split at a ratio of 1-for-80. This is to be made effective at 5 p.m. Eastern time that day. The stock will start trading at the new level the following Monday.
With the move, Faraday will -- at least for now -- be more in compliance with Nasdaq listing requirements that mandate a minimum share price of $1.
That 1-for-80 ratio is fairly aggressive. In the shareholder vote, which took place earlier this month, investors elected a reverse split with a ratio anywhere from 1-for-2 to 1-for-90.
Now what
Not all is dark and dismal for Faraday, however. August saw, finally, the rollout of its ultra-high end EV, the FF 91 2.0 Futurist Alliance. Given the company's struggles to get the car to market and to keep its business afloat, though, it still has quite some distance to drive before reaching viability.
