MULN stock is trading around $1 after the reverse stock split 1 vs. 9


Involved:

  • Mullen Automotive has begun a 1-for-9 reverse split that will start trading at a new price after the split on August 11th.
  • MULN’s share price closed at $0.1130 on Thursday but opens Friday at the post-split price.
  • Mullen’s stock must remain above $1 for at least 10 consecutive trading sessions to remain compliant with NASDAQ rules.
  • Mullen started manufacturing Class 3 commercial electric vehicles in Mississippi.

Mullen Motors (MULN) The stock fell 8.6% at the open on Friday after putting up its new reverse-adjusted share price. MULN needs to trade above $1 for 10 consecutive sessions in order to maintain its NASDAQ listing.

Mullen Stock News: Second reverse stock split puts Mullen above $1

This is already Mullen’s second reverse split to take effect in 2023. In early May, Mullen went through a 1-for-25 split that briefly pushed the share price down to $1.60. But CEO David Misery and the company immediately initiated a massive stock sale policy at the time to raise funds for the fledgling electric vehicle (EV) company that sent the share price down near $0.10.

Since Mullen’s board won the right to trigger the reverse split at a recent shareholder meeting between 1-for-2 and 1-for-100, it’s somewhat surprising that the board didn’t rush for a higher post-split price. The post-hash price is just above the $1 NASDAQ compliance threshold.

Mullen needs to keep the stock price above $1 for at least 10 consecutive trading days but no more than 20. In a press release, the company immediately acknowledged this was the case.

“There is no guarantee that the company will meet the requirements of the minimum bid price,” the statement issued on Thursday read.

The NASDAQ Listing Rule 5810(c)(3)(H) has other caveats as well. Rule 5810(c)(3)(h) states:

“Employees may, in their discretion, require the Company (to maintain an offer price of at least $1.00 per share) for a period of not more than ten consecutive business days, but generally not more than 20 consecutive business days, before determining that the Company has demonstrated its ability to Maintaining Compliance for the Long Term In determining whether the Company must meet the (minimum $1 Bid Price Standard) after ten business days, employees will consider the following four factors: (1) the Compliance Margin (the amount at which (the price of Bid is higher than $1 minimum (standard)); (ii) Volume (lack of trading volume may indicate a lack of bona fide market interest in the securities at the stated bid price); (iii) Market Maker Montage (number of market makers who bid at $1.00 or more and the size of their price); and (iv) the direction of the stock price (is it up or down).”

This gives the NASDAQ a large amount of latitude in determining the fate of Mullen’s shareholders. On the bright side, management has reiterated its earlier announcement that it plans to begin buying up to $25 million in shares once it offers its shares in the next 10th quarter, so this policy should raise the share price to a safer level.

Some existing shareholders will also receive additional equity since Mullen has decided not to issue any fractional shares and instead “rounds up” units less than nine shares to the next whole share number. For example, shareholders who have 100 shares on August 10 will be awarded 12 shares on August 11 instead of 11.1 shares (i.e. 100/9).

In other news, Mullen this week announced the start of production of the Mullen Three EV semi-truck cab. Mullen has already received orders worth $79 million for 1,250 Mullen three Series 3 EV trucks from Randy Marion Automotive Group and MGT Lease, with the first batch to be delivered later this month.

The Series 3 commercial vehicle is being built at the Tunica plant in Mullen, Mississippi. Mullen Three has an MSRP of $68,500 before tax subsidies.

Frequently asked questions about Mullen Automotive

Mullen Automotive is a publicly traded electric vehicle company based in Brea, California that typically uses outside partnerships to manufacture its vehicles. The company was established in 2014 and currently sells self-designed electric delivery vehicles. Besides its commercial offerings, Mullen plans to begin manufacturing the Mullen FIVE EV crossover in late 2024 or early 2025. Mullen Automotive will go public on the Nasdaq stock exchange through a reverse merger in late 2021.

David Michery has been the CEO of the company since its founding and incorporation in 2014. The current company came from the merger of CODA Automotive and Mullen Motor Cars through acquisition. Joining Michry are Chief Financial Officer Jonathan New, Chief Commercial Officer John Schwegman and Head of Automotive, Calin Popa.

Through a partnership with Randy Marion Automotive Group, Mullen distributes the Mullen One delivery van that has an electric range of 110 miles. Through an agreement with a Chinese manufacturer and distributor based in Ireland, the company also distributes the Mullen-GO Commercial Urban Delivery EV in Europe. In July 2023, Mullen will begin commercial production at its Mississippi facility of its long-haul Series 3 EV cab-chassis truck for immediate delivery. With its 60% stake in Bollinger Motors, Mullen will also reap the benefits of the B1 SUV and B2 pickup trucks, as well as other commercial vehicles in the future. A production date for the Mullen FIVE crossover isn’t set until at least late 2024, but it’s already taking reservations.

Mullen has diluted its shares since going public in late 2021. This is because the company so far has little revenue from operations and no dividend. The stock is down more than 99% since the company’s reverse merger in November 2021, and the rapid dilution is mostly to blame. Taking into account Mullen’s 1-for-25 reverse stock split on May 4, 2023, Mullen had 33,338,727 shares outstanding on September 30, 2022, but 126,281,274 shares on March 31, 2023. The company is permitted to sell up to 200 million shares under the authorization Present.

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