Shares of electric vehicle (EV) upstart Mullen Automotive (NASDAQ:MULN) swung higher in early afternoon trading. This comes following a key announcement from management. Specifically, the 100th Mullen Three Class 3 cab chassis electric truck rolled off the assembly line in Tunica, Mississippi. However, the news fails to address the extraordinary skepticism toward MULN stock.
Still, from an optimistic standpoint, Mullen deserves credit for sticking it out against exceptionally challenging circumstances. “This is an important milestone for Mullen and demonstrates our EV assembly plant in Tunica is scaling up to meet the commercial vehicle production schedule that was planned at launch,” said Mullen CEO and Chairman David Michery.
“We are laser-focused on commercial vehicle production and customer deliveries,” the head executive added. Further, the accompanying press release noted that Mullen’s production plan is aligned with current customer purchase orders. Previously, Randy Marion Automotive Group — one of the largest car dealerships in the Carolinas — placed a purchase order for 1,000 Class 3 trucks.
Mullen earlier noted that its Tunica facility plans for an annual production of 3,000 Mullen Three trucks. Moreover, overall production capacity allows Mullen to meet existing purchase orders while providing it flexibility to address any additional customer demand.
Investors Remain Unimpressed With MULN Stock
While no one should take anything away from Mullen, it’s practically impossible to ignore the obvious: investors remain unimpressed with the company’s efforts. For example, while MULN stock managed to jump around 7% in the early afternoon session, it did so under choppy conditions. Not only that, in the trailing month, shares suffered a decline of more than 41%.
Adding to the woes, MULN stock fell a catastrophic 93% in the past half-year period. And in the past 52 weeks, it gave up more than 99% of equity value. Even more garish, due to the company’s reverse stock splits, MULN’s 52-week range runs from $6.95 to $10,744.82, according to Google Finance. Even among meme traders, Mullen has lost much credibility.
As TipRanks contributor Steve Anderson pointed out several days ago, Mullen recently received shareholder approval for its third reverse stock split. Naturally, many stakeholders jumped ship because of the poor underlying implications. Frankly, they didn’t have to read between the lines.
Effectively, Michery stated that the only real prospect for MULN stock to stay listed on the Nasdaq exchange was via a reverse split. Adding to the concerns for the EV enterprise, the latest move was a significant one: a 1-for-100 reverse split that became effective on Dec. 21 prior to the opening bell.
Why It Matters
Although MULN stock attracts attention among retail speculators, one glaring issue exists. While MULN’s short interest as a percentage of float comes in at 13.72% — an elevated metric — the short interest ratio sits at only 0.01 days to cover. That means based on average trading volume, the bears can unwind their position within a few minutes.
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On the date of publication, Josh Enomoto did not have (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.
