Mullen Automotive’s (NASDAQ:MULN) cost to borrow is now reaching new highs.
Ortex reports Mulllen’s live cost to borrow at 389.63% with the max cost to borrow having reached 454.59% on Thursday.
The cost to borrow, per Ortex, is the annualized percent of interest on loans, typically borrowed by brokers and hedge funds.
This percentage figure may change on a daily basis and level out through its ‘cost to borrow average’.
Hedge funds short on MULN stock are paying this massive interest rate just to be able to continue shorting it.
In the meantime, it costs retail investors nothing other than unrealized losses to buy and hold the stock.
When a stock’s cost to borrow is this high, it usually suggests a high conviction from short sellers.
The risk these hedge funds are taking is big considering there is strong conviction within the retail community as well.
Hedge funds risk getting squeezed out of this play having accumulated cost to borrow fees in the process.
MULN stock is currently trading at $1.25 and is down more than -84% this year-to-date.
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MULN Short Interest Data
Mullen’s short interest has also begun to rise, signifying more short sellers are targeting the company.
Currently, MULN has a short interest of 16%-17%, updated daily here.
This is enough short interest to squeeze short sellers from their positions and initiate a short squeeze like we’ve seen in the past with AMC Entertainment for example, who only had a 22% short interest before dropping to 14% and shares rising from $9 to its all-time high of $72 per share.
However, there are two big obstacles here.
- Massive buying pressure (liquidity) is needed.
- Dark pool trading is suppressing retail demand.
Liquidity has been running dry in the stock market despite the S&P500 leveling out this year.
Banks are facing a crisis and the industry has even begun to call for a ban on short selling banking stocks.
But up to 70% of Mullen Automotive shares are being trading away from the lit exchange according to the most recent data.
The company has also stated that they are looking into the possibility of manipulation and illegal short selling of MULN stock.
In March, the company saw as many as 55 million FTDs in one single day.
Failure-to-delivers can occur in options trading or when selling short naked, per Investopedia.
Mullen Automotive announced in late April 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.”
Latest MULN Stock News and Updates
Aside from the latest Mullen cost to borrow updates, the company has had very positive developments this year.
While many shareholder hoped Mullen Automotive would not proceed with its latest 1-for-25 reverse stock split, the company has begun to fulfill new EV orders this year.
Mullen Automotive has received a new $15.7 million purchase order for 250 Class 3 Commercial EV trucks.
The company announced on Thursday the contract is valued at $15,755,000 for a full delivery date by December 2023.
Mullen announced the signing of a vehicle purchase agreement with MGT Lease Company (“MGT”), a national fleet leasing provider, to purchase 250 all-electric commercial class 3 cab chassis EV trucks.
The vehicles are slated for delivery beginning in August 2023, with complete fulfillment of the purchase agreement occurring by December 2023.
The vehicle orders will be fulfilled through Randy Marion Automotive Group, a distributor of Mullen’s commercial EVs.
“We are excited to begin delivering trucks to MGT Leasing this summer as they continue to scale up their business,” said John Schwegman, chief commercial officer Mullen Automotive.
MGT is a growing commercial vehicle sales and leasing company based in North Carolina, with annual revenue of over $70 million in 2022 and $100 million projected for 2023.
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