Faraday Future (FFIE) stock price is flying: Wyckoff says avoid

By:
on May 15, 2024
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  • Faraday Future’s stock has surged hard this week.
  • It soared by over 367% on Tuesday and is up by more than 120% on Wednesday.
  • The company’s future is in peril as the cash burn escalates.

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Faraday Future (NASDAQ: FFIE) stock price is flying as the meme mania picks steam. It soared by over 367% on Tuesday and is up by over 127% in the premarket session. It was trading at $0.6600, its highest swing since January, giving it a market cap of over $12 million.

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FFIE’s future is still in peril

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Faraday Future has been one of the worst-performing electric vehicle (EV) companies in the world. It has been a cash incinerator that has burned over $3 billion in the past few years and is now running out of money. The most recent results showed that it had just $6.7 million in cash while its net loss stood at over $70 million.

A lot has happened in the past few months. Most notably, Nasdaq has decided to delist it from the exchange since its stock has remained below $1 for long. Also, it has not published its annual report, commonly known as 10K.

Therefore, the ongoing Faraday Future stock surge is happening as day traders continue pumping highly shorted companies like GameStop, AMC, and MicroCloud Hologram. As we saw in 2021, stocks that surge for meme reasons tend to drop after the bull run ends.

Fundamentally, it is hard to see Faraday Future’s future. First, it is in the electric vehicle industry that is going through major challenges as growth stalls. That explains why most EV companies like Tesla, Nio, and XPeng have tumbled.

Second, it is unclear whether there is enough demand for Faraday Future’s FF 91 vehicle, which has a sticker price of over $300k. In contrast, the most expensive Tesla Cybertruck goes for less than $150k. $300k for an EV from an untested company is a bit too much.

Third, Faraday Future has run out of money. As mentioned, it has less than $10 million in cash and is still burning substantial sums of money.

Faraday Future stock price forecast

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Faraday Future

FFIE chart by TradingView

Turning to the 4H chart, we see that the FFIE share price has been in a consolidation phase in the past few months. This performance is a sign that it was in the accumulation phase of the Wyckoff Method.

It then moved to the mark-up phase of this strategy where demand usually outweighs the supply. In most periods, the stock then moves to the distribution phase of the Wyckoff method followed by a markdown, where it erases the gains.

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