What happened?
Canada’s ride-hailing stock Facedrive (TSXV:FD) has tumbled more than 60% so far in September 2021. According to Bloomberg, Imran Khan, one of the co-founders, has claimed that the company is considering bankruptcy protection as soon as this month.
It took the stock 14-odd months to soar to $60 levels this year from $2 apiece in 2020. Notably, it took seven months for it to fall back to $2 from $60. To be precise, Facedrive stock has lost 97% of its market value since February this year.
So what?
Everything is falling apart at Facedrive, and an ugly ending seems near for the company once touted as a “people-and-planet-first” company. Key executive departure, heavy stake selling, and now potential bankruptcy are making matters worse.
While Facedrive stock continues to dig deeper, the former chief executive Sayan Navaratnam and Imran Khan have been busy blaming each other. Navaratnam said that Khan has sold hundreds of thousands of shares of the company and has made millions of dollars.
Facedrive’s founders had share lock-up agreements for a few years. However, Imran Khan’s lock-up periods ended in March 2021 and the next few months, and the stock saw an accelerated fall.
Now what?
Importantly, the stock could continue to fall further, given the recent developments. Along with the co-founder, others may also join the selling spree now, mainly on the bankruptcy fears.
What’s bizarre is, some investors still seem hopeful of the company’s recovery and buying heavily. On September 7, more than 1.3 million shares exchanged hands against its three-month average daily trading volume of 191,000.
For the first half of 2021, Facedrive reported total revenues of $10 million and a net loss of $13.4 million. With no sustained profitability in sight, and problems magnifying at the top management, investors can expect continued pressure on Facedrive stock.
