Earlier this week, Mullen Automotive (NASDAQ:MULN) announced that its shares would undergo a 1-for-9 reverse stock split. This decision was made after shareholders at the company’s recent annual meeting of stockholders voted in favor of authorizing a reverse split in a range between 1-for-2 and 1-for-100.
Today, Mullen announced that the 1-for-9 reverse split would become effective as of tomorrow, Aug. 11. Due to the reverse split, every nine shares of MULN stock held will consolidate into one share, while the price of MULN will increase by a factor of nine. Mullen stated that fractional shares will not be issued, but instead will be rounded up to the nearest whole share. Percentage ownership of MULN will not be affected by the reverse split, excluding the effects of rounded-up shares.
MULN Stock to Trade on a Reverse Split Adjusted Basis on Aug. 11
Mullen is conducting the reverse split in order to regain compliance with Nasdaq’s minimum price requirement of $1. The exchange notified Mullen of its noncompliance status on Sept. 7, 2022 due to MULN trading below $1 for 30 consecutive business days. In order to regain compliance, companies trading below $1 generally need to trade above $1 for 10 consecutive business days. Shares of MULN traded above $1 for 10 consecutive business days as of May 17. This came after Mullen conducted a 1-for-25 reverse split on May 4.
Despite the company seemingly fulfilling the requirement, Mullen still remains on Nasdaq’s list of noncompliant companies. That’s because Nasdaq has the power to require some stocks to trade above $1 for more than 1o consecutive business days but generally no more than 20 consecutive business days. In deciding this, the exchange considers trading volume, the amount a stock trades above $1, price trend and the number of market makers that quote a stock at or above $1.
Meanwhile, Mullen currently trades at about 11 cents. At 11 cents, a 1-for-9 reverse split would take shares to 99 cents, just below the $1 threshold. As a result, Mullen is playing it very tight, as there are only 18 business days days between Aug. 11 and Sept. 5. It’s not exactly clear how many days Nasdaq will require MULN to trade above $1 before regaining compliance.
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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.
