Shares of Mullen Automotive Inc. blasted higher in very active trading Thursday, after the California-based electric vehicle maker enacted a much-needed reverse stock split.
Separately, the company said it delivered 38 additional Class 3 low-cab-forward trucks to Randy Marion Automotive Group, which should result in Mullen recording $2.5 million in revenue.
The stock
MULN,
rocketed 82.8% in afternoon trading, and has traded within an intraday range of down 13.1% and up 133.8%. The stock has been halted for volatility eight times since the opening bell at 9:30 a.m. Eastern.
Trading volume spiked to 18.8 million shares, compared with a split-adjusted full-day average volume of about 637,200 shares.
Earlier this week, Mullen shareholders voted, after being given a second chance, to authorize a reverse stock split in the range of 1-for-2 to 1-for-100. The company then said it would go ahead with a 1-for-100 reverse split, which effectively multiplies the stock price by 100.
The company said the primary reason for the split was to bring the company in compliance with the $1.00 minimum bid requirement to stay listed on the Nasdaq exchange.
The stock had closed at a pre-split record low of 8 cents on Wednesday. After the split, it was recently trading at around $14.96.
Including the previous reverse splits this year of 1-for-9 in August and 1-for-25 in May, the stock price has been multiplied by 22,500 times. That means if an investor owned 22,500 shares in April, they now have 1 share.
In light of the prior reverse stock splits implemented by the company and the dilutive impact those have had on shareholders, Chief Executive David Michery wrote in a letter to shareholders that presenting another reverse split to the board of directors was “one of the most difficult decisions” he has made as CEO.
Michery said that, while he believes the stock price does not reflect the value of the company, the stock is still under threat of being delisted. If the stock didn’t trade above $1 for at least 20 consecutive trading days on or before Jan. 22, it would be delisted.
“There was only one way to give the company the best possible chance of regaining minimum bid compliance for the mandated 20 trading days and that was by doing a significantly large reverse stock split,” Michery said.
Read: Mullen Automotive files suit against investors, alleging they used ‘spoofing’ to manipulate its share price.
Keep in mind that Mullen has included in its quarterly filings and annual reports going back to 2021 — the company completed its merger with Mullen Technologies in November 2021 — warnings that there was “substantial doubt about our ability to continue as a going concern.”
In the latest quarterly filing, the company recorded a net cash outflow from operating activities of $113.6 million for the nine months ending June 30. And as of June 30, the company had $214.0 million in cash and cash equivalents.
Even with Thursday’s rally, the stock has plummeted 99.7% year to date.
Now back to the good news, the 38 vehicles delivered to Randy Marion were part of a commitment to buy 1,000 vehicles, with most of them expected to be delivered in 2024.
And on Wednesday, the company said its Mullen ONE electric Class 1 cargo van received certification from the California Air Resources Board as a zero-emission vehicle. That means the vehicle is now certified in all 15 states and Washington, D.C. that follow CARB regulations.
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