Mullen Automotive (NASDAQ:MULN) stock has plummeted after rising earlier this year.
The stock fell to $0.21 on Monday and is currently down -32% this year-to-date after having surged to $0.44 in January and again in February.
MULN stock was given a price prediction of $24.15 earlier this year, up more than +7,000% from the then price of $0.32.
7 analysts from CNN Money said Mullen Automotive was a strong a buy yet the stock has fallen 34% in the past month alone.
Shareholders believe MULN has become a victim to naked short selling.
What is naked short selling?
Naked shorting is the illegal practice of short selling shares that have not been affirmatively determined to exist, per Investopedia.
The predatorial practice allows short sellers to short a stock without there actually being any stock available to short.
The SEC approved the use of naked short selling on IPOs in 2015 although it was deemed an illegal practice in 2010.
In this article we’re going over 3 big signs that point towards naked shorting in MULN.
Be sure to share this article with the community to raise awareness.
#1. Call Options Overweigh Number of Puts
The number of call options on Mullen Automotive continue to outweigh the number of put options.
Although volume has dropped recently, call options are still leading the derivatives market.
Even when MULN stock had hundreds of thousands of call option orders, the stock price was being suppressed despite very little put option volume.
Usually when the demand of a stock isn’t reflecting intraday, we can conclude that either heavy dark pool trading or naked shorting is taking place.
This is a big problem we’ve seen with other stocks such as AMC Entertainment for example.
Mullen Automotive stock has patterns that suggest suppression may be keeping share prices from rising.
#2. MULN Stock FTDs
Another clear indication of naked shorting in a company can be traced back to the number of FTDs out in the market.
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.
Failure-to-deliver can occur in options trading or when selling short naked, per Investopedia.
By the end of January, Mullen Automotive had more than 15 million FTDs amounting to more than $5 million, per Stocksera.
Naked shorting could be occurring in both shares and options contracts.
#3. Short Ladder Attacks
Shor ladder attacks are a way of trading back and forth between parties with the mission to drive shares lower.
It’s a loophole that isn’t necessarily deemed illegal but could be combined with the illegal tactic of ‘spoofing’.
Spoofing occurs when orders flood the market to change the direction of a stock but get cancelled right before they execute.
This form of naked shorting influences the market through the use of fake shares or ‘fake orders’ that don’t necessarily exist.
A perfect example of a short ladder attack can be seen in the image above where price chops upwards but ultimately drops lower and lower like a ‘ladder’.
This is manipulation of the stock from rising.
Related: Investors Say CEOs Should Fight Naked Short Selling Like GNS
Do You Think Naked Shorting in MULN is Happening?
Leave your thoughts in the comment section below.
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About The Author
The entire stock market is corrupt. Tell me why this couldn’t be happening to every single stock being traded today. Tell me why CEOs are not suing to protect their investors. Tell me why the FBI is not investigating.
Legal complications I assume, to some at least. GNS, GTII, CLNV are all taking legal action against naked shorting.
it’s definitely not right, and it’s not fair to regular investors like myself, especially when I own a decent amount and she is at a low price hoping for the stock to go up a lot, but now I’m fearing because it’s being manipulated and being kept down, they have no choice, but to do a reverse stock split to stay in compliance, which will be terrible because I will lose the leverage of all the shares I own at a low price, it’s just not fair
Why would any investor today believe the biggest institutions and traders follow the rules? The fines levied aren’t even a parking ticket compared to the profits made, so honestly, what incentive is there to stop this type of behavior? The answer is there isn’t one. Why follow the rules and laws governing trading when you can ignore them, and make a lot more money in the process? I hope Mullen can grow and maybe help revolutionize the automotive industry.
Leave your thoughts on what’s happening with MULN stock below.