Wolfpack Research Reveals Short Position In EV Maker Faraday Future

Wolfpack Research announced on Thursday its short position in EV maker Faraday Future (FFAI) and opined that it would likely revert to being a penny stock before eventually delisting.

The firm stated that it believes the latest pump in stock value was based on “fake orders, a rebadged Chinese minivan and a tsunami of lies” intended to induce retail investors to buy ahead of dilution.

FFAI’s stock jumped on July 22 after Nature’s Miracle announced a preorder of 1000 EV minivans in a deal worth up to $100 million. However, Wolfpack thinks this is fake, provided that Nature’s Miracle does not have the cash to make such a purchase. Further, the founder of Nature’s Miracle and Faraday Future CEO Jia Yueting were classmates in business school, the firm noted.

On Stocktwits, retail sentiment around FFAI stock remained within ‘bearish’ territory over the past 24 hours, while message volume stayed at ‘low’ levels.

Wolfpack alleged, citing former employees and media reports, that the EV minivan called the FX Super One is a rebadged vehicle from Chinese automaker Great Wall Motors. The over 10,000 pre-orders for the vehicle are all non-binding, including the one made by Nature’s Miracle, it added.

While the company recently announced $82 million of new financing, Faraday didn't reveal the financier, and Wolfpack believes this may be a reiteration of prior financing rounds where the CEO and other insiders appear to have used fronts to disguise that they were the ultimate source of funding. The firm also raised doubts about how the CEO has money to fund the company after emerging from his personal bankruptcy. “We think he hid assets from the bankruptcy court,” it said, while adding that this includes homes on the California coast and shares of Lucid.

The ultimate goal of these moves by the company appears to be to pump up the stock ahead of massive dilution, Wolfpack alleged. FFAI is slated to vote on September 19 to increase the authorized common share count by 39% and issue shares to certain convertible note and warrant holders.

YT Jia returned as co-CEO of the EV maker in April earlier this year after stepping down in 2019. However, Wolfpack believes this was “theater” since he was running the company even while he was not in the CEO position.

FFAI stock is down 29% this year and approximately 57% over the past 12 months.

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