MULN Stock: Why Mullen Automotive Just Surged Over 60%?
July 06 2023 - 4:02PM
Finscreener.org
Mullen Automotive (NASDAQ:
MULN) is a manufacturer of electric vehicles. Valued
at a market cap of less than $100 million, this penny stock surged over 65% on July 5th, 2023,
at the time of writing. Despite its recent gains, MULN stock trades
over 99% below all-time highs.
Let’s see what drove Mullen
Automotive stock higher and if it can sustain this momentum in
future trading sessions.
Mullen Automotive aims to combat “naked short-selling
activities”
According to the company’s press
release, Mullen partnered with law-firm Christian Attar to combat
naked short-selling activities. Its press release states, “The
company believes it may have been the target of a market
manipulation scheme involving illegal naked short selling of its
common stock and has decided to investigate and expose any
potential wrongdoing.”
Christian Attar has successfully
prosecuted and collected millions of dollars on behalf of clients
from multiple broker-dealers, hedge funds, and asset-based lenders
who have previously been accused of market manipulation
schemes.
This disclosure may have driven
MULN stock significantly higher on July 5.
Is this penny stock a buy or a sell?
Mullen Automotive has been among
the worst-performing stocks on the NASDAQ exchange in the last two
years, wiping out significant shareholder wealth. MULN stock traded
at $50 in early 2020 and touched a record high of $400 three years
back. Today, itU+02019s trading at just $0.17 per share.
Mullen Automotive is part of a
capital-intensive industry and will have to raise significant cash
to expand its manufacturing capabilities to
benefit from economies of scale. It reportedly had a cash position
of $135 million at the end of March 2022. This number fell to $60
million in Q1 of 2023.
In the six months before March
2022, the company’s operating expenses stood at $141.5 million,
suggesting massive shareholder dilution is on the cards.
Due to its falling share price,
there is a chance for Mullen Automotive to be delisted from the
Nasdaq exchange. According to regulatory requirements, companies
trading on the Nasdaq need to be priced at more than $1 per share.
It recently underwent a reverse stock split to artificially inflate
share prices to above $1, but the sustained sell-off soon resulted
in a price drop.
Due to its low share price,
Mullen Automotive also faces a potential delisting from the Russell
2000 index. Similar to the Nasdaq, the Russell 2000 index requires share prices to trade over $1 in
the last 30 days.
What next for MULN stock price and
investors
Mullen Automotive is a
beaten-down penny stock that is wrestling with massive losses and
shareholder pessimism. The company recently announced it sold 22 EV
cargo vans to Randy Marion Automotive, a U.S.-based distributor of
commercial EVs. This sale will allow Mullen to post revenue for the
first time, which will be reported in Q2 of 2023.
The EV deal with Randy Marion
Automotive will bring in revenue of $308,000, which is quite
negligible.
In a recent press release, Mullen
claimed, “The company is reporting that the vans will start
shipping today from MullenU+02019s Mississippi-based assembly plant
to Randy Marion Automotive Group in North Carolina.”
Mullen Automotive emphasized it
is in process with six campus EV pilot programs across four
different industry categories: aviation, healthcare, utilities, and
universities. In fact, Mullen believes its campus van is a good fit
with closed-campus commercial applications.
MULN is a high-risk bet, and the
penny stock is not positioned to deliver outsized returns to
shareholders, despite the recent surge in share prices.
Mullen Automotive (NASDAQ:MULN)
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