Mullen Stock Forecast: MULN holds onto 13% gain on Tuesday
- MULN stock has fallen 19% since receiving notice that NASDAQ exchange would continue to honor its listing.
- Mullen Automotive had been in violation of a rule requiring its share price to remain above $1.
- NASDAQ has given Mullen until January 22, 2024, to keep its share price above $1 for 20 consecutive trading sessions.
- Mullen CEO David Michery will hold a shareholder meeting on December 15 to vote on a reverse split with a ratio between 1-for-2 to 1-for-100.
Mullen Automotive (MULN) stock has held onto a 13% gain through lunchtime on Tuesday. MULN stock’s higher open acts as a relief for shareholders, who were dealt a 9.3% decline to start the week on Monday.
Mullen stock was unable to hold onto its rally following last Thursday’s announcement that the NASDAQ exchange will give the company further time to push its stock price above the necessary $1 threshold. Friday and Monday’s sell-off may be over, however, as Mullen stock has rallied as high as $0.34 on Tuesday.
The US market is attempting to advance on Tuesday as investors look ahead to the Federal Reserve’s interest rate decision on Wednesday. The NASDAQ Composite, Dow Jones and S&P 500 have all eked out slight gains at lunchtime after opening lower in the day.
Mullen stock news
On Thursday, Mullen announced two requirements that the NASDAQ Hearings Panel provided in order to retain its listing on the well-known exchange:
“1. on or before Jan. 22, 2024, the Company must demonstrate compliance with Listing Rule 5550(a)(2), by maintaining a closing bid price of $1 per share for 20 consecutive trading sessions; and
2. on or before March 8, 2024, the Company must demonstrate compliance with Listing Rule 5620(a) by holding an annual shareholder meeting.”
CEO David Michery has already announced a meeting to vote on the reverse split set for December 15. Much of the downward pressure on Mullen Automotive has come from the knowledge that the electric vehicle (EV) manufacturer will need to effect a serious reverse split in order to drive the share price above $1.
“I am pleased NASDAQ gave the Company this opportunity to continue implementing its business plan. We are diligently working to regain and maintain compliance with Nasdaq’s continued listing requirements,” Michery said in a statement.
Management already failed a similar policy in late August when it effected a 1-for-9 reverse split that was not enough to keep the share price above the threshold. MULN shares fell to $0.60 in the leadup to the September 5 date given by NASDAQ to retain its share price.
This time around, shareholders are expecting management to realize a much larger reverse split to make sure there is no chance the share price will fall below the $1 level before January 22. Management should still have the majority of its $25 million buyback program available to drive the share price higher. As of September 27, management said it had only spent $5,610,600 of the funds available for share buybacks and has not updated this figure since.
Penny stocks FAQs
Originally, penny stocks were any stock that traded for less than $1, i.e. pennies. The Securities & Exchange Commission has since altered the definition to include any stock that trades for less than $5. Penny stocks are typically associated with small companies that have either experienced poor results, sending their share price down, or with companies who dilute their share price by issuing lots of shares over time in order to fund operations or acquisitions.
Some penny stocks trade on respected exchanges, such as the NASDAQ or the NYSE. Examples of these are Mullen Automotive (MULN) and Bark (BARK). Those exchanges have requirements though. For the NYSE, listed stocks must have 1.1 million publicly traded shares outstanding with a market value of at least $40 million. The NASDAQ requires a share price minimum of $4, a minimum of 1.25 million shares and a market cap of $45 million. Most penny stocks, however, trade on the OTC (over-the-counter) market. This may mean the OTC Bulletin Board or the privately-owned OTC Markets Group.
Quite often the sharpest movers on any normal trading day are found among penny stocks. This is because non-penny stocks tend to have more liquidity, and the market is more certain about larger companies’ long-term values. Penny stocks are illiquid, meaning there is little supply available if an announcement drives more buying demand into a particular stock. There are no market makers that hold large amounts of penny stocks just to dispense them at a slightly higher price point. Additionally, most of these penny stocks suffer from a news desert where few market players know anything relevant about them. This is why a small biopharma company can issue news about a successful drug trial and immediately rocket 500% higher, with no analysts on Wall Street covering it.
Typically, the answer is “No”. Penny stocks are more risky than higher-priced stocks on average. Penny stock investors have a higher chance of losing their capital by investing in weaker companies. There is a reason why they are penny stocks in the first place, which is that largely the mainstream market is not interested in investing in them. Two groups of investors tend to focus on penny stocks, however. The first group are day traders, who know that the lack of liquidity in penny stocks could lead to extremely large swings over a short time period. The other group is made up of investors who like the fact that these stocks are disregarded. This allows these investors to gain an advantage by benefiting from upcoming announcements, because the larger market is not paying attention.
Mullen stock forecast
Mullen stock has registered a serious rally on Tuesday, which might stem from management using some of its buyback funds. Mullen stock has been in a downtrend since at least September 18.
Bulls will need to push the MULN share price above the 21-day Simple Moving Average (SMA) if they want any sustained rally to occur. The 21-day SMA is moving just below $0.36 on Tuesday. Most traders will likely wait for the reverse split to arrive in December. Support just above $0.22 stems from the floor found there on October 23 and 24.
MULN daily chart