Dividend Stocks

MULN Stock Alert: Why Is Mullen Down 10% Today?

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Mullen Automotive (NASDAQ:MULN) stock is down another 10% today, bringing its year-to-date (YTD) loss to nearly 90%. This comes after the electric vehicle (EV) company initiated a 1-for-25 reverse stock split in order to regain the $1 threshold required by Nasdaq. Following the reverse split, shares breached the $1 price level, but are now below $1 again.

The uncertainty of Mullen’s compliance has shareholders on edge. According to Nasdaq, regaining compliance means trading at or above $1 for 10 consecutive business days. In a recent press release, Mullen confirmed that MULN stock had traded above $1 for 10 consecutive business days, or from May 4 to May 17. The company also stated that it was awaiting “confirmation from Nasdaq that it meets Nasdaq’s requirements for continued listing as a result thereof.”

However, in certain situations, Nasdaq may require a company’s stock to trade above $1 for more than 10 consecutive business days:

“[C]ompliance is generally achieved by meeting the requirement for a minimum of ten consecutive business days. However, Staff may, in its discretion, require a Company to satisfy the applicable Price-based Requirement for a period in excess of ten consecutive business days, but generally no more than 20 consecutive business days, before determining that the Company has demonstrated an ability to maintain long-term compliance.”

Furthermore, Nasdaq’s Noncompliant Company list still has Mullen marked as noncompliant.

MULN Stock: Why Is Mullen Down 10% Today?

Nasdaq considers several factors in determining whether a company needs to trade at or above $1 in excess of 10 consecutive business days, but generally no more than 20 consecutive business days. These include but are not limited to the trend of price, margin of compliance, trading volume and the “Market Maker montage.”

First, Mullen’s price trend is on an obvious decline. Next, margin of compliance refers to how much a stock trades above $1 per share. Meanwhile, trading volume shouldn’t be a concern here, as the average daily trading volume for MULN is 16.74 million shares. Finally, “Market Maker montage” refers to the number of market makers quoting a stock at or above the minimum price requirement, taking into account the size of their quotes.

The weight of each of these factors is not specified by Nasdaq. However, it appears that the exchange may have used its discretion to require MULN to trade at or above $1 for more than 10 consecutive business days, given Mullen’s inclusion on the noncompliance list. A request from InvestorPlace to Nasdaq concerning MULN stock’s compliance status was not immediately returned.

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On the date of publication, Eddie Pan did not hold (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. 

Eddie Pan specializes in institutional investments and insider activity. He writes for InvestorPlace’s Today’s Market team, which centers on the latest news involving popular stocks.