Shares of Mullen Automotive Inc., a California-based electric vehicle maker, experienced a significant increase in trading volume on Thursday following the implementation of a much-needed reverse stock split.
Increase in Revenue
Additionally, Mullen announced that it delivered 38 more Class 3 low-cab-forward trucks to the Randy Marion Automotive Group. This delivery is expected to generate $2.5 million in revenue for Mullen.
Sharp Stock Price Increase
The stock, ticker symbol MULN, soared 82.8% during afternoon trading, reaching an intraday range of -13.1% to +133.8%. Since the opening bell at 9:30 a.m. Eastern, the stock has been paused eight times due to increased volatility.
Surge in Trading Volume
Trading volume skyrocketed to 18.8 million shares, compared to the split-adjusted full-day average volume of about 637,200 shares.
Reverse Stock Split Decision
Compliance with Nasdaq Requirement
The primary reason for the split was to ensure compliance with the minimum bid requirement of $1.00 to remain listed on the Nasdaq exchange.
Pre-Split Record Low
Before the reverse split, the stock had reached a pre-split record low of 8 cents on Wednesday. Following the split, it is currently trading around $14.96.
Multiple Reverse Splits
This year alone, Mullen has implemented two previous reverse stock splits: 1-for-9 in August and 1-for-25 in May. In total, the stock price has been multiplied by 22,500 times. Therefore, an investor who owned 22,500 shares in April would now only possess 1 share.
CEO’s Difficult Decision
CEO David Michery acknowledged the dilutive impact of previous reverse stock splits on shareholders. In a letter to shareholders, he expressed that presenting another reverse split to the board of directors was one of the most challenging decisions he has had to make as CEO.
Mullen Automotive: Battling Delisting Threat and Generating Positive Momentum
Mullen Automotive, an electric vehicle manufacturer, is currently facing the risk of delisting due to its stock price not reflecting the company’s value. In order to regain minimum bid compliance for the required 20 trading days, CEO Michery advocated for a significant reverse stock split as the best possible solution. If the stock fails to trade above $1 consecutively before January 22, it could face delisting.
It’s important to note that Mullen has consistently issued warnings about its ability to sustain as a going concern in its quarterly filings and annual reports, dating back to 2021 when it merged with Mullen Technologies. The latest quarterly filing revealed a net cash outflow of $113.6 million from operating activities for the nine months ending on June 30. However, the company’s cash and cash equivalents amounted to $214.0 million as of June 30.
Despite experiencing a significant decline of 99.7% year to date, there is positive news for Mullen Automotive. Out of the commitment to purchase 1,000 vehicles, the company has already delivered 38 vehicles to Randy Marion, with the majority set to be delivered in 2024.
Additionally, the Mullen ONE electric Class 1 cargo van has received certification as a zero-emission vehicle from the California Air Resources Board, expanding its certified presence to all 15 states and Washington, D.C., which adhere to CARB regulations. This certification further solidifies Mullen’s commitment to sustainable transportation.
While Mullen Automotive faces challenges related to its stock price and financial stability, it continues to make strides in delivering innovative electric vehicles and expanding its market presence.
