Mullen Automotive (NASDAQ:MULN) stock is now 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.
The rule is only triggered once the shares of a company drops by 10% within a day. The ten percent starts from the previous day’s close.
Short sell restriction remains for the remainder of the day and in many cases, the rule can extend to the next day.
MULN stock is down more than -86% this year-to-date and continues to be a target for short sellers looking to bankrupt the company.
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 issuing another reverse stock split.
The company has traded above its $1 minimum bid price requirement for 10 consecutive days after enacting a reverse stock split, but shares are trading only slightly above the compliance requirement.
Risk in MULN Stock Rises
CoinCodex predicts Mullen Automotive stock will surge big by 2030 and is giving it a ‘buy’ rating, but this doesn’t mean the risks today aren’t high.
“Based on our Mullen Automotive, Inc. stock forecast, Mullen Automotive, Inc. stock is currently a good stock to buy.
This is because the price of Mullen Automotive, Inc. stock is expected to increase by 1,174.67% in the next year.
According to our Mullen Automotive, Inc. stock prediction for 2030, MULN stock will be priced at $ 1,075.27 in 2030.”
Investor sentiment overall is more bullish than bearish, but institutional short sellers have much stronger advantages in the market than retail investors do, hence why MULN stock continues to plunge.
More than 70% of trading in Mullen Automotive stock is now happening in dark pools.
Dark pool volume averaged above 60% for the month of April and is averaging higher in May.
When shares trade outside the lit exchange, the true demand from retail investors is masked in dark pools.
SEC Chairman Gary Gensler has stated in various occasions that this is a real problem in the market; still, no proposal has been enforced to limit the use of dark pool and off exchange trading.
Mullen Automotive Announces Manipulative Short Selling Investigation
Mullen Automotive announced in April a new illegal shorting investigation regarding the high rate of FTDs as reported to the Securities and Exchange Commission (SEC).
In March, the company saw as many as 55 million FTDs in one single day.
FTDs, or Failure-to-deliver occurs when one party in a trading contract (whether it’s shares, futures, or options) fails to deliver on their obligations.
These failures derive due to buyers not having enough money to take delivery and pay for the transaction at settlement.
In the case of sellers, it means not having the goods to meet that transaction.
The company released the following statement:
“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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