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Electric vehicle (EV) stocks have massively underperformed the broader markets in the last three years due to several factors, including slower-than-forecast demand, stubbornly high inflation, elevated interest rates, rising competition, and a sluggish macro economy. In fact, most EV stocks currently trade at a sizeable discount to their record prices.
However, the pullback allows you to identify quality stocks and buy them at a lower multiple, given the longer-term, ongoing worldwide shift toward battery-powered vehicles. So, let’s see if this EV penny stock should be a part of your portfolio right now.
An Overview of Faraday Future Intelligent Electric Stock
Valued at about $50 million by market cap, Faraday Future Intelligent Electric (FFIE) stock is priced around $4 per share, as of Thursday's close.
Founded in 2014, Faraday Future offers a shared intelligent mobility ecosystem and aims to disrupt the automotive industry. The company designs and engineers next-generation smart electric connected vehicles. It will soon manufacture vehicles at its production facility in California, while additional future production capacity requirements will be addressed via a contract manufacturing partner in South Korea.
A Big-Ticket Announcement
Last month, Faraday Future announced it would hold a launch event for its China-U.S. Automotive Bridge Strategy on Sept. 19. The event will help investors gain insights into the company’s execution plan and the introduction of its second automotive brand.
Faraday Future expects the bridge strategy will position it to leverage artificial intelligence (AI) and software technologies for users across multiple markets, which should accelerate its mass-market entry and maintain its ultra-luxury offering.
In its press release, Faraday Future stated, “FF expects to leverage its unique bridge value to integrate the strengths of the U.S. automotive industry with those of Chinese original equipment manufacturers (OEMs) and parts suppliers and their respective supply chains, focusing on the $20,000 to $80,000 price segment.”
“Our Bridge Strategy could introduce a ‘performance capable EV at a fraction of the price,’ by empowering a second brand with much of the core technologies used on the $300,000 FF 91,” said Matthias Aydt, Global CEO of Faraday Future. “A mass-market second brand could make the ‘AI car of the future’ the AI car of the people.”
Faraday Future is already in discussions with several Chinese OEMs and global suppliers to accelerate this unique strategy.
Faraday Future Raises $30 Million
Shares of the penny stock closed sharply lower on Sept. 6, with FFIE erasing premarket gains after announced that it secured $30 million in funding to drive growth and new business opportunities. This includes $22.5 million of new investments via convertible notes and warrants.
Given that Faraday Future is still at a nascent stage, the company will have to raise capital multiple times in the future to expand its manufacturing capabilities. The auto sector is extremely capital-intensive, and participants might take several years to turn profitable and benefit from economies of scale.
Moreover, Faraday Future will still have to wrestle with competition from new and legacy players such as Tesla (TSLA), Byd (BYD), Nio (NIO), Ford (F), General Motors (GM), Lucid (LCID), and Rivian (RIVN). While this EV penny stock has the potential to deliver big moves fast, FFIE is best reserved for speculators with a higher risk tolerance.
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