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Faraday Future Intelligent Electric Inc. (FFIE) Surges 134%: Sell or Hold?

StockInvest.us, 2 days ago

Faraday Future Intelligent Electric Inc. Technical Analysis

Faraday Future Intelligent Electric Inc. (FFIE) saw an astounding surge of 134.04% on May 16, 2024, closing at $1.65. The stock price fluctuation has been dramatic, ranging from as low as $0.038 to as high as $117.36 in the past year. The current closing price is significantly above the 50-day moving average of $0.09802 but significantly below the 200-day moving average of $8.30. The relative strength index (RSI) sits at an extremely overbought level of 99, indicating an extraordinary buying frenzy that could lead to a pullback shortly.

The average true range (ATR) of 11.58 suggests high volatility, and the lack of defined support and resistance levels emphasizes the unpredictability of the stock's future movements. The MACD value of 0.003741, being marginally positive, shows some current upward momentum. Additionally, the volume at 1.10 billion is significantly higher than the average volume of 67.56 million, reinforcing the heightened trading activity.

Fundamental Analysis

The fundamental outlook of Faraday Future remains concerning despite the recent price surge. The company is significantly undervalued with a market cap of $19.12 million, especially considering the recent Nasdaq delisting determination due to prolonged low trading price. The EPS of -129.06 and a PE ratio of -0.01 indicate severe financial instability. The company faces immense challenges, evidenced by its inability to manufacture cars and reliance on short-squeeze momentum driven by heavy short positions.

The lack of material announcements and the surge primarily driven by retail investor activity further undermines the stock’s intrinsic value. This socio-economic phenomenon of meme stock rallies often behaviorally influences the stock price short term but is unsustainable in the long term.

Faraday Future Intelligent Electric Inc. Short-term Prediction

For the next trading day, May 17, 2024, FFIE stock might experience a decline as technical indicators such as RSI and ATR suggest an overbought condition and high volatility, respectively. A pullback is likely as investors take profits from the massive single-day surge.

In the upcoming week, the stock may continue to experience high volatility. If momentum from meme stock traders persists, it could see another upswing. However, the absence of real fundamental improvements and persistent financial instability suggests a probable return to lower levels following the exhaustion of the short squeeze.

Intrinsic Value and Long-term Potential

The intrinsic value of FFIE appears significantly lower than its current market price. Given the nascent state of its operations, negative earnings, and looming existential risks, the long-term prospects are bleak unless the company secures substantial financing and demonstrates its ability to scale production and sales. The current price surge is not reflective of the company’s fundamental value and could mislead potential long-term investors.

Overall Evaluation

Faraday Future Intelligent Electric Inc. (FFIE) should be considered a 'Sell' candidate. Despite recent significant price movements, the stock's financial instability, potential delisting, and valuation disconnect from current fundamentals present high-risk factors, making it unsuitable for long-term investment based on the given data. Concerns about sustainability and lack of material positive news further underscore the stock's unfavorability moving forward.

Check full Faraday Future Intelligent Electric Inc. forecast and analysis here.