Faraday Future Intelligent Electric Inc.

On October 7, 2021, J Capital Research published a report alleging, among other things, that Faraday Future was unlikely to ever sell a car, noting that after eight years in business, the Company has “failed to deliver a car,” “has reneged on promises to build factories in five localities in the U.S. and China,” “is being sued by dozens of unpaid suppliers,” and “has failed to disclose that assets in China have been frozen by courts.” Moreover, the report alleged that Faraday Future’s claimed 14,000 deposits are fabricated because 78% of these reservations were made by a single undisclosed company that is likely an affiliate. The report further alleges that contrary to representations of progress toward manufacturing made by Faraday Future in September 2021, former engineering executives did not believe that the car was ready for production.

On this news, the Company’s share price fell $0.35 per share, or more than 4%, to close at $8.05 per share on October 8, 2021.

On November 15, 2021, Faraday Future announced that it would be unable to file its Form 10-Q for the fiscal quarter ended September 30, 2021 on time. Faraday Future further announced that its board of directors “formed a special committee of independent directors to review allegations of inaccurate disclosures,” including the claims in the J Capital report.

On this news, the Company’s share price fell $0.28 per share, or approximately 3%, to close at $8.83 per share on November 16, 2021.

The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that the Company had assets in China frozen by courts, (2) that a significant percentage of its deposits for future deliveries were attributable to a single undisclosed affiliate; (3) that the Company’s cars were not as close to production as the Company claimed; (4) that, as a result of previously issued statements that were misleading and/or inaccurate, Faraday Future could not timely file its quarterly report; and (5) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.