Following a recent 1-for-25 reverse stock split, the price of Mullen Automotive (NASDAQ:MULN) regained Nasdaq’s $1 minimum price requirement. The company echoed this in a press release soon after, stating that MULN stock had traded above $1 from May 4 (the day of the reverse split) to May 17, or for 10 consecutive business days.
However, an announcement that Mullen would have to wait until June 12 to receive $45 million from an existing securities purchase agreement (SPA) seems to have shareholders worried. Today, MULN stock fell below $1, just a few days after satisfying Nasdaq’s minimum price requirement. Shares of Mullen have fallen to as low as 97.1 cents during intraday trading, marking a new reverse-split adjusted 52-week low.
MULN Stock: Mullen Shares Fall Below $1
So, what happens now? Nasdaq will send Mullen a deficiency notice if the closing price of MULN stock trades below $1 for 30 consecutive business days. As of May 4, MULN has not yet closed below $1. A deficiency notice would provide Mullen with an 180-calender-day period to regain compliance. Regaining compliance is defined as having a closing price of $1 or more for 10 consecutive business days.
If MULN stock fails to trade above $1 for 10 consecutive business days during the 180-calendar-day compliance period, it could still be eligible for another 180-day extension. Per Nasdaq:
“A company listed on the Nasdaq Capital Market may be eligible for an additional 180-day compliance period if it meets the market value of publicly held shares requirement for continued listing, all other initial inclusion requirements for the Capital Market, except for the bid price requirement, and provides written notice that it intends to regain compliance with the bid price requirement during the second 180-day compliance period, by effecting a reverse stock split if necessary.”
Still, falling below the $1 threshold is extremely negative for Mullen. That adds another point of concern to management’s plate. Even worse is that the company just regained compliance and removed a major overhang, which now seems to have returned. If the electric vehicle (EV) company is unable to gain compliance by the end of the second 180-day period, it will receive a delisting letter from Nasdaq. Mullen will then be eligible to request a hearing in front of Nasdaq’s Hearing Panel, “which will stay the delisting.”
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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.
