Mullen Automotive (NASDAQ:MULN) stock is in the red today following the announcement of a securities offering and the resale of up to 2.49 billion shares. The amount and type of securities to be offered will be disclosed through “one or more prospectus supplements” at a later time.
Mullen has authorization to issue up to 5 billion shares of common stock and 500 million shares of preferred stock. As of Feb. 8, the company had issued 1.74 billion shares of common stock and 1.57 million shares of Series A, C and D preferred stock.
Back in October, the electric vehicle (EV) company announced that it would resell up to 900 million shares. The offering consisted of common stock and common stock issuable upon the conversion of Series D preferred stock and warrants.
MULN Stock: Mullen Discloses Resale of Up to 2.49 Billion Shares
Several notable shareholders will be participating in the current resale, such as Bollinger CEO Robert Bollinger, Esousa Holdings and Acuitas Capital. Bollinger is eligible to resell up to 51.06 million shares, which represents the entirety of his stake. Meanwhile, Esousa is eligible to resell 901.02 million shares, while Acuitas can resell 883.35 million shares. In addition, both Esousa and Acuitas’ stake mainly consists of convertible securities. Mullen noted in a filing that the two entities owned zero shares of MULN common stock prior to the offering.
Mullen has stated that it will not receive proceeds from the sale of common stock by selling stockholders. These stockholders may sell their shares at their discretion.
Esousa and Acuitas converting their securities into common stock will be highly dilutive for MULN stock, resulting in more shares flooding the market. Mullen noted in the filing:
“The additional shares of our authorized stock available for issuance may be issued at times and under circumstances so as to have a dilutive effect on earnings per share and on the equity ownership of the holders of our Common Stock.”
As of Dec. 31, 2021, there were 17.47 million weighted average shares outstanding. That figure jumped to 1.36 billion as of Dec. 31, 2022. Within that time period, shares of MULN fell lower by more than 90%.
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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.