Will Jia Yueting’s final bet be completely “suffocated” or rebirth from Nirvana?

Will Jia Yueting turn over this time?

Jia Yueting, although he ran off and owed debts, there are always new stories continuing.

Faraday Future (“FF”), an electric car company that allowed Jia Yueting to bet on his entire net worth, finally went public in the United States. The success or failure of this company is regarded by the outside world as the only hope for Jia Yueting to stand up.

On the evening of July 22, Beijing time, Faraday (stock code: FFIE) was listed on the Nasdaq in the United States. In the pre-market trading hours that day, the stock once soared nearly 50%. That night, the stock rose up to 23% after the opening, and then plunged sharply. Eventually, it closed up 1.45% to $13.98, with a market value of about $4.5 billion.

Jia Yueting was full of confidence during the interview. He said, “We really hope to be the No. 1 in the spire market and have the confidence to subvert Maybach, Faraday, Bentley and so on.”

When the reporter asked whether Jia Yueting planned to return to China, Jia Yueting said that he must return to China and he would pay his debts. “I will solve it completely.”

Will Jia Yueting's final bet be completely "suffocated" or rebirth from Nirvana?

On the night of the launch, Jia Yueting reiterated the FF phased goals on the App:

The first stage: FF 91 Futurist Alliance Edition must be delivered to users around the world within 12 months;

The second stage: With the launch of subsequent models and the gradual formation of a user ecosystem, smart terminals achieve explosive growth in revenue and rapid growth in ecological revenue, becoming one of the leading companies in the mainstream high-value user market.

This kind of rhetoric is full of the consistent “Jia Yueting style”, exaggerated and deceptive, just like his famous saying back then: let us together, suffocate our dreams!

Will Jia Yueting turn over this time?

01 How did FF go public?

In 2014, Jia Yueting teamed up with former Tesla executive Nick Sampson and Lotus China executive Nie Tianxin to jointly establish a company in California-“LeTV ENV Inc.”. In the summer of that year, the company officially changed its name to Faraday Future, Faraday Future.

As early as 2016, FF has more than 1,000 employees in the United States. At the CES Electronics Show in January 2017, Jia Yueting completed the debut of his first model, the FF91, and completed 64,000 bookings within 36 hours of the conference.

However, FF91 has not been mass-produced, let alone delivered.

As of December 31, 2020, FF’s cumulative loss was 2.39 billion U.S. dollars. In 2019 and 2020, FF’s net losses were US$142 million and US$147 million, respectively. Even FF’s book cash is only 1.12 million US dollars, and the total debt is nearly 600 million US dollars.

How did Faraday Future, which has been losing money, insolvent, and almost suffocating, made it into the Nasdaq gate?

FF is listed using the SPAC method , that is, special purpose acquisition companies, which is a backdoor listing method in the US stock market. Different from buying shell listings, SPAC acquisition companies of this type build their own shells by investors, and through mergers and acquisitions of non-listed companies within a certain period of time to inject business and value added, and then achieve “shell listings”, thereby indirectly Realized the “injection into the company”, which is the current listing of FF.

This shell listing method does not have a high valuation business in itself, and it is destined to have no high requirements on business conditions. However, this kind of listing is a short-term financing behavior. For the US Securities Regulatory Commission, considering that some innovative companies are currently short of development funds, but there is a certain degree of future plasticity, how to help these companies win development opportunities, so the opening Such a “gray” way of listing and financing. SPAC’s listing is a “betting on the future”. Investors in the secondary market will buy stocks at the beginning. However, if the company does not have substantial products and profit models after a period of time, the stock price will not rise, and it will soon being abandoned.

After the approval of the merger plan between FF and PSAC (a shell company, listed entity), FF will have 1 billion U.S. dollars in funds at its disposal. CEO Bi Fukang said that the money will first be invested in FF 91’s manufacturing plant in Hanford, California, and subsequent product development and delivery.

Bi Fukang
Bi Fukang

FF previously stated that the US$1 billion is mainly composed of two parts, including the US$230 million in cash held by PSAC in the form of trust, and the oversubscription of a fully committed common stock PIPE (private equity fund) of US$775 million at a price of US$10 per share.

However, this only 1 billion US dollars may be able to help the first batch of FF91 production and delivery. If it is to continue in the future, it will definitely need continuous financing.

02 If FF is mass-produced, will anyone pay the bill?

FF has stated that FF81 and FF71 for the general public are already under development, and promised to deliver FF91 to the global spire users on time, with high quality, and high product strength within 12 months. Bi Fukang also revealed that FF91 has entered the pre-production stage and will be limited to 300 units worldwide. Only a few selected users are eligible to be invited as the first users.

The mass production has not yet been achieved, and the other side of FF is aggressively planning to open a store.

At present, FF’s first futurist experience center has been set up in Manhattan, New York, USA on May 25, Beijing time. According to FF, FF mainly adopts the direct sales model and will carry out sales business in 20 top cities around the world in the future.

Will Jia Yueting's final bet be completely "suffocated" or rebirth from Nirvana?

According to the Daily Economic News report, a widely circulated FF communication material to investors shows that FF offline stores will be concentrated in the United States, northern Europe and the Chinese market. Among them, the Chinese cities involved include Beijing, Shanghai, Guangzhou, Shenzhen and other first-tier cities, as well as Chongqing and Xi’an two inland cities.

In the FF91 product benchmarking, Jia Yueting did not put Tesla in his eyes at all, but directly aimed at the products of top luxury brands such as Bentley Bentayga, Lamborghini Urus, Mercedes-Benz S-Class, and Porsche Taycan. It is also a BMW 7 series.

Of course, the price is also in line with them. According to the plan, FF will first launch the FF 91 Futurist version in Q1 of 2022, with a target price of 180,000 US dollars (approximately RMB 1.16 million), and then launch the FF 91 regular version in Q4 of 2022, priced from 100,000 US dollars ( About RMB 650,000).

Will Jia Yueting's final bet be completely "suffocated" or rebirth from Nirvana?

As a latecomer to the car track, FF has been so high-profile as soon as it is listed, and the price is close to traditional big names. I believe that at such a high price, those who are willing to adopt early adopters may be old friends and top fans of FF, or before. Investors and friends who put Jia Yueting on a horse, half-sell and half-free are all right. Jia Yueting’s calculation is that as long as these core fans are satisfied, the follow-up financing story will be easy to tell.

According to FF Global CEO Bi Fukang, FF has 880 global patents so far, of which 550 core electric vehicle technologies have been authorized, and it is the only company that can compare technology with Tesla. The core technologies of the next-generation Internet intelligent electric travel ecology with the core of the artificial intelligence) system, the three-electric system, and the iVPA platform system.

However, even if he holds a large number of patents and has no actual products on the market, Jia Yueting does not drive the car to run on the street, everything is mirrored.

The Tesla, which Jia Yueting completely despised, has long been sold to the world. The three brothers of the new domestic car-making forces, Weilai, Ideal, and Xiaopeng, have also begun to conquer the city in the Chinese market, instead of staying in the Chinese market. Concept, staying on the yearning for a better future.

Even through this listing, FF can really stand up and achieve mass production, but there are still many actual challenges: What are the unique advantages of FF’s high pricing? Can the smart cockpit ecology be recognized by users? Can FF make blood for itself during mass production? When will it be profitable, or even take a step back to torture, can it support itself?

03 Does Jia Yueting have money to pay off the debt?

Jia Yueting himself knows that he must change his “brand image” in the minds of the Chinese people. What he said must be fulfilled, which is vital to the future of FF. Therefore, returning to China next week must be implemented and the debts owed must be paid off. Luo Yonghao is all performing “Really Biography”, and he is such an awesome character as Jia Yueting, and he certainly can’t be inferior to Old Luo.

On July 21st, Jia Yueting added 6 more pieces of information about the person being executed, and the total amount of execution reached 4.87 billion yuan. In addition to the amount executed in the previous period, Jia Yueting’s total amount of execution has reached 9.025 billion yuan.

According to the information disclosure of the newly-enforced person, those who came to collect debts from Jia Yueting included Huafu Securities, Ping An Bank, Ping An Securities, Guotai Junan Securities, and Minsheng Trust.

In addition to domestic debts, before that, after Jia Yueting’s personal bankruptcy and reorganization took effect, the creditor trust was formally established and started to operate. Jia Yueting officially transferred all personal assets recognized by the US court, that is, all FF equity and related income rights held by individuals into the creditor trust.

That is, all of the 2.96 billion US dollars in debt owed by Jia Yueting will be repaid with FF’s equity, turning the creditors into FF shareholders. According to the restructuring plan, Jia Yueting will not have to bear the debt of 2.96 billion US dollars in debt, and all the debts will be put into the Faraday Future (FF) equity trust fund. That is, all the debts owed by Jia Yueting will be repaid with FF’s equity, successfully turning the creditors into FF shareholders.

According to public information, before the merger transaction (FF and PSAC), FF held the company’s management and employees (50%+ equity), and Evergrande held 32% of the equity.

After the merger transaction, the original shareholders of FF held a total of 50.3% of the shares, and the subscribers of the additional shares to raise supporting funds held 23.5%. The shareholding ratio of the creditors converted was 17.2%. Based on the latest market value, the corresponding market value of the shares converted by the creditors RMB 5 billion. After the merger and listing, Evergrande’s equity in FF was diluted from 32% to 20%.

For Jia Yueting’s creditors, the FF shares he holds through the trust fund are about 5 billion yuan according to the current valuation. However, this does not mean that Lao Jia can repay the 5 billion yuan.

First, the stock price of FF is constantly changing. The 5 billion yuan is only calculated based on the current stock price. One year later, two years later, the 5 billion may be little left, or it may skyrocket several times, depending on the development of FF. It depends on whether Lao Jia can fulfill all the awesomeness he has blown.

Second, this 5 billion is only the book value, it is FF stock, and it is held on behalf of the trust fund, and cannot be cashed in a short time.

04 From Evergrande to Geely, hit a “gold mine”?

Some people think that there is no shortage of Chinese white knights beside Jia Yueting.

On January 27 this year, FF and PSAC signed an agreement with the subscription investors. The subscribers agreed to subscribe for 79.5 million common shares of PSAC at a subscription price of US$10 per share, for a total of US$795 million.

Among them, 17.5 million shares (valued at US$175 million) will be subscribed by investors in a certain tier city in China, subject to the approval of Chinese regulatory authorities. At that time, the media revealed that the first-tier city refers to Zhuhai. On July 11, the first-tier cities in China that were originally scheduled to invest in FF issued a notice stating that the investment could not be completed due to foreign exchange reasons, and the investment quota it owned has been transferred to relevant investment institutions.

In other words, even the Zhuhai State-owned Assets Supervision and Administration Commission had planned to invest USD 175 million in Jia Yueting, but it was later terminated due to some reasons.

On June 25, 2018, Evergrande announced the acquisition of 100% of the shares of Hong Kong Shiying Company, accounting for 45% of the shares of SmartKing, a joint venture between Shiying and Jia Yueting, with an investment of US$2 billion over three years and an initial payment of US$800 million.

According to the FF roadshow PPT, Evergrande was still the largest shareholder of FF before going public. On July 22, the stock price of Evergrande Auto (00708.HK) changed its multi-day downward trend and rose rapidly during the session. As of the close, Evergrande Auto’s share price rose more than 20% to 15.88 Hong Kong dollars per share, with a total market value of 155.1 billion. The surge of Evergrande may be related to Evergrande’s holding of 20% of the shares of FF listed companies. After FF went public, China Evergrande held a 20.4% stake in the company through Season Smart Limited.

Will Jia Yueting's final bet be completely "suffocated" or rebirth from Nirvana?

In addition to Evergrande, there is also Geely.

On January 29, 2021, Geely Holding Group officially announced the cooperation with FF. The two parties plan to cooperate in the fields of technical support and engineering services, and explore the possibility of providing foundry services by the joint venture between Geely and Foxconn. At the same time as a financial investor, Geely also participated in a small amount of investment in the FF listing.

05 Facing the future, can Jia Yueting become a god?

The launch of FF, Jia Yueting’s dream of building a car has taken another step forward. However, this dream is too large, coupled with Jia Yueting’s previous bad record, the future is full of too much uncertainty.

For Jia Yueting’s personal brand, he walks between dreamers and scammers. He is a blend of entrepreneurs and lunatics. Fortunately, he did not evade the problems left over from the past, and he did not publicly escape his debts, “passively”. Converted his own FF shares into a trust fund for creditors. Dealing with it in this way eased the contradiction and also left a glimmer of life for myself to stand up.

Will Jia Yueting's final bet be completely "suffocated" or rebirth from Nirvana?

In fact, the current Jia Yueting is just a worker. He worked hard to manage FF, for his creditors, and for himself to be able to stand up.

Facing the future, if FF can create a miracle, Jia Yueting can also be a god. This may be his last chance. If it is still a beautiful scam, Lao Jia will be dead for the rest of his life!

Reference materials:

1. Penguin, Tencent Auto Insight, “FF’s listing is happy to raise $1 billion in life-saving money, and China’s mass production is variable. How long can Jia Yueting last? “, July 22, 2021

2. Tiger Sniff APP, Wang Xiaoyu, “Why are there still people investing in Jia Yueting?” “, July 22, 2021

3. I heard about Auto, Lin Jiahao, “Jia Yueting is working for the creditors?” “, July 22, 2021

– END –

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/will-jia-yuetings-final-bet-be-completely-suffocated-or-rebirth-from-nirvana/
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