Faraday Future Intelligent Electric Inc. (FFIE) experienced a significant decline in its stock price on December 31st, closing at $2.43, down 22.61% from the previous close of $3.14. The stock opened at $4.23 and reached a high of $4.46 before plummeting to a low of $2.12, indicating extreme volatility throughout the trading day. The trading volume was extraordinarily high, at 157,630,812 shares, which is 1,623.92% of the average volume, suggesting intense trading activity.
The sharp decline followed a pre-market surge driven by excitement over Faraday Future's upcoming participation in CES 2025, where it plans to unveil its FX prototype vehicles. This announcement initially fueled investor optimism, as the company also secured $30 million in cash financing commitments, seen as a positive step towards stabilizing operations. However, despite the initial enthusiasm, the stock faced a significant pullback as speculative trading patterns and technical analysis suggested the recent surge was unsustainable. A Reddit user noted, "If today’s candlestick closes below the top of the triangle, the breakout will fail," indicating a bearish sentiment.
Additionally, discussions on social media platforms like Reddit highlighted skepticism about the stock's ability to maintain its gains, with comments such as "You’ve seen the pump - now here comes the dump," reflecting concerns over the company's financial challenges, including high cash burn and minimal liquidity. The stock's high retail ownership and speculative interest further contributed to the volatility, as retail investors speculated on a potential short squeeze.
Despite the company's efforts to pivot towards more affordable EVs with the FX series, investor sentiment remains cautious due to ongoing financial instability and heavy dilution risks.