A family office analyst says Mullen Automotive (NASDAQ:MULN) stock is now a big red flag.
The chief investment analyst in a small family office registered in Singapore says that Mullen Automotive should only be seen as a speculative trade for the probability of a ‘short squeeze‘.
“In my opinion, MULN stock can only be a speculative instrument for short-term trading – the only serious risk to my Sell rating is the percentage of shares outstanding sold short.
If MULN experiences even the slightest positive news or the company’s CEO goes public again with a loud statement like the one about solid-state batteries, the stock will most likely experience a strong short squeeze.”
Although MULN stock has a high probability of squeezing, the analyst says MULN stock is now a big red flag due to two major risk factors: the company’s extremely high operating costs and the high possibility of dilution (again).
“The company’s complex capital structure against a backdrop of unprofitability only makes MULN stock more confusing and confounding.
Since the company went public, competition in the market has increased significantly, and now it looks like MULN has lost its chance against this backdrop.
To the chagrin of current shareholders, only a takeover by a larger player can save it, if the executives will be able to find a buyer.
On its own, the company is unlikely to free itself from the shackles of constant dilution – even if its product is commercialized.
Dilution looks like an inevitable solution to at least keep paying salaries”, he continued.
MULN stock is up +6% at the start of the new week and is down more than -89% this year-to-date.
The stock has fallen below Nasdaq’s $1 bid requirement again after its 1-for-25 reverse stock split and risks splitting once again.
Latest Mullen Automotive News and Updates
Mullen Automotive has entered a new partnership with Amerit Fleet Solutions, a service and warranty provider for vehicle fleet programs with over 1,800 service professionals.
The company announced today Amerit Fleet Solutions as the provider for national service and warranty work, supporting Mullen’s commercial vehicle lineup, including the Mullen CAMPUS – EV Cargo Van, the Mullen ONE – Class 1 EV Van and the Mullen THREE – Class 3 EV Cab Chassis Truck programs.
Amerit will provide national fleet service and warranty repair work for the Mullen CAMPUS EV Van, the Mullen ONE, which is a Class 1 EV Cargo Van, and the Mullen THREE, which is a Class 3 EV Cab Chassis Truck.
Prior to program launch, Amerit will be working closely with the Mullen commercial product team and vehicle technicians in Troy, Michigan, and Tunica, Mississippi, to train on Mullen’s commercial vehicles, establishing servicing protocols and requirements.
“Amerit has over 1,800 highly trained vehicle service technicians across the U.S., and we have built our business and reputation on providing stellar servicing across many different fleet and commercial vehicle programs,” said Dan Williams, CEO of Amerit.
“We look forward to providing Mullen and their fleet customers with the same high level of service and commitment.”
“We are confident that Amerit is a great fit and provider for servicing our commercial vehicles,” said John Schwegman, chief commercial officer of Mullen Automotive.
“Every strategic initiative has been put in place to ensure the viability for our Class 1 and Class 3, from sales, service, warranty and overall vehicle support.
Amerit is a well-established national provider of fleet service and warranty work,” said David Michery, CEO and chairman of Mullen Automotive.
Mullen Stock Joins the Short Sell Restriction List
Last week, Mullen Automotive stock was added to the short sell restriction list.
On Friday, MULN stock tripped the SEC’s short sale circuit breaker making the SSR list.
“This rule is designed to restrict short selling from further driving down the price of a stock that has dropped more than 10 percent in one day compared to the closing price on the previous day,” says the SEC.
As of April 30, Mullen says it possessed $116.1 million of cash available for operations, but the company continues to face risk of delisting or diluting again.
The company traded above its $1 minimum bid price requirement for 10 consecutive days after enacting a reverse stock split, but shares have now fallen below the compliance requirement.
In late April the company announced it was looking into investigating the possibility of manipulative trading.
“Mullen Automotive announced today that it is taking certain affirmative steps in light of the extraordinary trading volume and evidence of unusually high levels of failure to deliver on short sales as reported to the U.S. Securities and Exchange Commission.
These steps include retaining outside counsel, which is working with Shareholder Intelligence Services LLC (“ShareIntel”) to undertake a comprehensive analysis of data derived from broker-dealers, clearing firms and other sources to provide actionable intelligence on potential market manipulation and illegal short selling.
ShareIntel offers unique access and insight into shareholder position movements and the ability to proactively track equity flows and identify suspicious, aberrant and/or unusual trading activity.
As a fiduciary to its shareholders, the Company will do everything in its power to address any evidence of improper trading in Mullen securities.”
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This analyst’s assessment of MULN stock as a big red flag seems to carry a strong sense of caution and concern. Their emphasis on the speculative nature of the stock and the potential for a short squeeze reveals a level of skepticism and wariness. The mention of the company’s high operating costs and the likelihood of dilution further reinforces the negative sentiment surrounding MULN. It’s evident that the analyst believes the stock’s prospects are uncertain and fraught with challenges, leaving investors in a precarious position.
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