Why Faraday Future joined the meme-stock rally - and then some

By James Rogers

Shares of the electric-vehicle startup registered eye-popping gains last week

One of the most unusual events in last week's meme-stock rally was the phenomenal surge in shares of electric-vehicle startup Faraday Future Intelligent Electric Inc., which went stratospheric on zero news.

The EV startup's shares surged to extraordinary levels, closing up 367.5% on May 14 and registering gains of 147.2% and 134% on May 15 and May 16, respectively. The stock snapped a five-day winning streak on May 17, before ending Monday's session up 74.8% and then falling 22.8% on Tuesday. The stock is down 7.2% in premarket trades Wednesday.

"$FFIE reminds me of the 1st days of the epic GameStop mega short squeeze," wrote @gabbsPanama on X, on May 15. "Fun days then... fun days ahead. Hope some crazy kids make millions."

Related:Is the meme-stock frenzy over already? Possibly, say experts.

"$FFIE What an emotional roller coaster on this name!" wrote @StocksThatGo on X on May 19.

Shares of Faraday Future (FFIE), which are currently trading around $1.39, rose as high as $3.90 last week. The stock closed at $0.0461 on May 10 and, when it hit $3.90 a week later, had registered a gain of 8,359.9%, according to Dow Jones Market Data.

Last week's gains easily surpassed the performance of meme-stock darlings GameStop Corp. (GME) and AMC Entertainment Holdings Inc. (AMC), which soared amid a rally that lifted a number of other heavily-shorted stocks.

Related: GameStop and AMC pare back gains as dust settles from Roaring Kitty-fueled meme-stock frenzy

But shorts are not playing a part in the latest twist in the Faraday Future story, according to analyst Ihor Dusaniwsky of S3 Partners. "Short interest is just $55 million, so shorts are not driving the price up with short covering or down with short selling," he told MarketWatch on Tuesday.

The stock's movement is clearly disconnected from the California-based company's fundamentals. Faraday Future's most recent quarterly results were filed in November, at which time it said it had $8.6 million in cash.

In February, Faraday Future announced a reverse stock split and an updated plan for growth in 2024. But in April the startup said that it received a Nasdaq delisting determination letter as its stock had a closing bid price of 10 cents or less for 10 consecutive trading days. Faraday Future said it is appealing the delisting determination.

Related: These behavioral trends drove the GameStop and AMC meme-stock rally

Set against this backdrop, the recent movement in Faraday Future's share price has been attributed to investors trading the stock's volatility. A meme trader who goes by the name of Obi told MarketWatch that he has enjoyed success trading the Faraday Future meme rally, pointing to the company's low float and low market cap. "Not much needed to sway the price up or down," he added.

Faraday Future has a market cap of $59.32 million.

Last week, Faraday Future said that will report fourth-quarter results after market close on May 28.

-James Rogers

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

05-22-24 0710ET

Copyright (c) 2024 Dow Jones & Company, Inc.