Cost to Borrow Mullen (MULN) Stock Falls Again

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  • Mullen Automotive’s (NASDAQ:MULN) cost to borrow fee now sits at 76.52%.
  • The fee peaked at 742.53% on Dec. 23.
  • Shares of MULN stock are up by over 80% in the past five days.
MULN stock - Cost to Borrow Mullen (MULN) Stock Falls Again

Source: Ringo Chiu / Shutterstock

All eyes are on Mullen Automotive’s (NASDAQ:MULN) cost to borrow (CTB) fee, as the figure has fallen yet again after peaking at 742.53% on Jan. 3. Between Dec. 23 and Jan. 3, the fee rose by a staggering 8,000%. Today, the fee sits at 76.52%, down about 90% from the peak on Jan. 3. At the time of writing, Fintel reports that there are 1 million shares available to short.

Make no mistake, a fee of 76.52% is still exceptionally high. The Street notes that the average CTB fee is between 0.3% and 3% per year. A stock with high short-seller demand can see its fees rise to 20% or higher.

While a high CTB fee signals high short-seller demand amid a scarcity of shares to be shorted, MULN stockholders on social media welcomed it. That’s because exorbitant CTB fees may influence short sellers to exit their positions and cover, which can increase the price of the underlying stock. Short sellers may also factor the CTB fee into their risk/reward model, and a high fee skews the potential for a profitable trade.

MULN Stock: Cost to Borrow Continues to Fall

Meanwhile, Fintel reports that there are currently 161 million shares sold short. That’s equivalent to a short interest as a percentage of float of 10.83%, which would take 0.57 days to fully cover. Short interest as a percentage of shares outstanding tallies in at 9.70%. Another financial website, MarketBeat, reports that short interest was 43.5% of the float as of Dec. 15 based on 161 million shares sold short. It appears that Fintel’s calculation is correct, as MarketBeat seems to have the incorrect figure for the float.

Shares of MULN stock have increased by over 80% during the past five trading days. That may signify that a short squeeze is currently in the works as short sellers cover to escape the high CTB fee.

Meanwhile, Mullen is gearing up for a momentous 2023. The company’s I-GO electric vehicle (EV) is expected to arrive in Ireland “in early January 2023.” Mullen has also received an order for 6,000 Class 1 EV cargo vans from Randy Marion Isuzu that has a total value of $200 million. The first shipments from that order are expected to be fulfilled during Q1.

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.


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