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Why Is Mullen (MULN) Stock Down 22% Today?

Investorplace·10/19/2023 19:45:58
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Of course, Mullen is an EV player in a completely different stage of its lifecycle and is currently simply trying to survive. With a market capitalization of only $50 million after today’s drop, Mullen is microscopic when compared to Tesla or most established names in this field.

Indeed, most investors in this high-interest rate environment want to see profitability and operating stability. Mullen offers neither of these. Accordingly, perhaps today’s move makes sense in relative terms, considering the risk-off mood of the market today.

Let’s dive into what else could be behind this drastic move in MULN stock today.

MULN Stock Plunges on Upcoming Stock Split Vote

As per a filing made public today, Mullen has asked shareholders to vote on two proposals at the company’s upcoming special meeting on Dec. 15. The particular vote that is causing consternation among the company’s investor base today is to approve a reverse stock split between 1-for-2 and 1-for-100. Thus, this would be the second such split to take place this year in a bid to keep MULN stock above the $1 per share minimum listing requirement from the Nasdaq.

Interestingly, fellow  InvestorPlace  contributor Eddie Pan pointed out earlier today that there are some stipulations around how many times a share can be reverse-split in a certain time frame. Essentially, a company isn’t allowed to split its shares over a cumulative ratio of 1-for-250 over a two-year period. If it does so, it “shall not be eligible for any compliance period specified in this rule,” and the stock will essentially be delisted.

Of course, there’s always the outside chance that MULN stock could regain the $1 per share level and hold that level for at least 10 consecutive business days, following some minor split. We’ll have to see how this vote plays out and what shareholders think. However, this early reaction suggests that most investors now simply want nothing to do with Mullen on this news.

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On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald's love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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