Short Selling

Short sellers continue to target Faraday Future Intelligent Electric Inc (FFIE:US)

Faraday Future Intelligent Electric Inc
(FFIE:US)
12 months:
-94%
Activity:
Bearish
Pattern:
High short interest
News:
Resignation of board members
Faraday Future Intelligent Electric Inc
(FFIE:US)
12 months:
-94%
Activity:
Bearish
Pattern:
High short interest
News:
Resignation of board members
The image's background depicts a black car, with the blog introduction mentioning the Short sellers continue to target $FFIE on top.

Short selling data can provide invaluable market insights. Short sellers tend to be sophisticated, high-conviction traders. If they’re shorting a stock, there’s usually a good reason they are doing so.

In this report, we are going to discuss the short selling data on Faraday Future Intelligent Electric Inc (FFIE:US). Faraday Future is a mobility company that is based in California. Established in 2014, the company is focused on developing and creating a mobility ecosystem that integrates clean energy, artificial intelligence (AI), and the Internet. Its flagship product is the FF 91, an all-electric, autonomous-ready vehicle. The company is listed on the Nasdaq and currently has a market capitalization of $207 million.

Faraday Future has high short interest

We last looked at the short selling data on Faraday Future in October 2021. At the time, the number of shares on loan had just spiked to around 15% of the free float, and we viewed this as a bearish signal. Since then, the stock has declined from $8.56 to $0.52 – a decline of around 94%. So, the short sellers have absolutely cleaned up here. What’s interesting, however, is that the short sellers are still aggressively targeting the stock today.

Indeed, our data shows that right now, around 69.35 million FFIE shares are on loan, representing around 59% of the free float. Utilization – a measure of demand on the short side – is 100%, while the cost to borrow is high at 7.3%.

What’s concerning is that there has been another large spike in the number of shares on loan recently. At the start of September, just 28.2 million shares were on loan. Today, the figure is 144% higher. This tells us that the short sellers have been ramping up their downside bets in recent weeks.

Why short sellers are targeting Faraday Future

It’s not hard to see why the short sellers continue to target Faraday Future. Put simply, the company is a mess right now.

In August, a number of Faraday Future employees wrote to the board and shareholders seeking the removal of Executive Chair Sue Swenson, suspecting she had organized attempts to "push the company into bankruptcy and restructuring."

Then, in September, FF Top Holding – a shareholder with 36% of the company’s voting rights – filed a lawsuit against the company seeking the removal of Swenson and director Brian Krolicki.

More recently, in early October, Swenson and board members Jordan Vogel and Scott Vogel provided their resignation notices, citing death threats and threats of physical violence.

On top of all this, the company has been battling high costs and supply chain disruptions. For the second quarter of 2022, its operating loss was $137 million, an annual increase of nearly 390%. Additionally, it has faced hurdles to raise funds required to start production of its car at its Hanford facility in California.

Given the attention the stock is getting from short sellers right now, we think caution is warranted towards it. The high level of short interest indicates that the short sellers expect the stock to keep falling.

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