It’s been a rough few days, and a rough year overall, for investors in Mullen Automotive (NASDAQ:MULN). Shares of this early stage EV maker have been absolutely pummeled due to a variety of factors. Today, MULN stock is down another 5%. At current levels, this stock remains more than 95% below its 52-week high, one of the worst performers on the Nasdaq over the past year.
At roughly 20 cents per share, investors may expect that Mullen would have already received a warning notice from the Nasdaq. And it has. Last year, the exchange filed a notice, requiring Mullen to achieve a $1 stock price by March 6 or risk being delisted. Today, Mullen confirmed that a 180-day extension has been filed, although delisting risk remains.
Another key driver of the company’s poor performance is allegations of insider trading from the Securities and Exchange Commission (SEC). The SEC has charged Acuitas CEO Terren Pfizer, a Mullen financier, with insider trading. That’s not a good look.
Thus, today’s news that Mullen has been hit by a court summons from Drawbridge Investments and DBI Lease Buyback Servicing for “acting in bad faith” in a previous financing agreement is just the tip of the iceberg. Indeed, any positive catalysts, such as the company’s ongoing product unveiling I reported on previously, aren’t being considered by investors.
Let’s dive into what to make of Mullen right now.
Is MULN Stock Investable?
With so many negative catalysts materializing for Mullen over the past month, investors may be excused for avoiding this stock. Indeed, delisting risk, SEC charges and a new lawsuit don’t bode well for the company’s outlook, at least in the near term.
Over the longer term, competition in the EV space and other macroeconomic issues remain. This is a company that’s not likely to be let off the hook easily. Indeed, it’s easy to see a scenario in which, even if the market roars back into bull mode, MULN stock continues to falter.
This may be a stock with too much hair for most investors to touch. Now in penny stock territory, it’s one I’m overly wary of.
Given the already heightened risks in the market, investors are clearly looking elsewhere for exposure. That seems to be the smart move right now.
On the date of publication, Chris MacDonald 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.