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Don’t Expect MULN Stock to Stay Above $1


  • Mullen Automotive (MULN) stock has surged recently following its reverse stock split.
  • However, this doesn’t mean it will stay at its current elevated price.
  • It is still an unstable meme stock that will likely quickly fall back to where it belongs.
MULN stock - Don’t Expect MULN Stock to Stay Above $1

Source: Sam the Leigh / Shutterstock.com

This week, one of the market’s most popular meme stocks finally saw some growth. Unfortunately, it is as superficial as can be expected. Mullen Automotive (NASDAQ:MULN) recently implemented a 1-for-25 reverse stock split. As InvestorPlace assistant news writer Eddie Pan reports, the company made this choice to remain in compliance with the Nasdaq’s listing requirements, which means maintaining a price of at least $1 per share. Since the split, MULN stock has surged and currently sits above the $1 mark, likely delighting retail traders.

However, this doesn’t mean that Mullen is on the path to profitability or that it will continue its upward trajectory. Quite the contrary, in fact. As is often the case with meme stock surges, it is important not to mistake superficial surges with actual growth potential. Companies don’t typically opt for reverse stock splits when things are going well.

Let’s review the many reasons why the electric vehicle (EV) producer still isn’t a good bet, regardless of what the stock charts might suggest.

MULN Stock Still Has Room to Fall

This company has risen to market prominence for all the wrong reasons. It captured the attention of the r/WallStreetBets crowd last year without demonstrating any actual growth potential. In April 2022, Hindenburg Research issued a damning short report, making a strong case that Mullen had even less to offer than investors realized. InvestorPlace contributor Josh Enomoto noted that the short-seller’s accusations included providing misleading information, raising even more red flags around MULN stock. But since then, things have only gotten worse for the company that Hindenburg described as “another fast talking EV hustle.”

Throughout recent months, Mullen has reported plenty of good news. It closed out successful partnerships and provided updates on its EV battery progress. Despite all the positive headlines, MULN stock failed to make real progress until this week, remaining primarily in the red. Even when the company successfully completed large-scale orders, it did little, if anything, to boost share prices. The underlying message remained clear: Mullen couldn’t generate sustainable growth, even when tailwinds were blowing in its favor. Pan noted that it even proved unable to rise today despite the recent reverse-stock split momentum. Now the company risks losing its spot in the Russell 2000 index.

InvestorPlace’s Louis Navellier recently laid out why Mullen investors are in for more pain. In his words:

“Mullen has made little progress using this cash to turn its early-stage EV businesses into a profitable enterprise. This combination, not alleged market manipulation, has been the reason behind MULN’s drop from over $10 per share to less than a dime per share.

But while considerable damage has been done, it’s far from over. Dilution will continue as the company gears up to convert previously issued preferred shares into up to 2.115 billion additional shares of common stock.”

Racing to the Bottom

Investors have never had a good reason to bet on MULN stock. But at this point, even the traders who embrace risk should know better. When once popular meme stock Bed Bath & Beyond (OTCMKTS:BBBYQ) prepared for bankruptcy and delisting, some investors turned to Mullen while others lamented their lost money.

Weeks later, things are no different, despite Mullen’s recent surges. The stock is already falling and will soon be back below the $1 mark where it belongs. Investors are better served to focus on other EV stocks that actually have something to offer besides superficial hype. As Navellier noted, it is still in a race to the bottom that will likely end in a collision course.

On the date of publication, Samuel O’Brient 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.

Samuel O’Brient has been covering financial markets and analyzing economic policy for three-plus years. His areas of expertise involve electric vehicle (EV) stocks, green energy and NFTs. O’Brient loves helping everyone understand the complexities of economics. He is ranked in the top 15% of stock pickers on TipRanks.

Article printed from InvestorPlace Media, https://investorplace.com/2023/05/dont-expect-muln-stock-to-stay-above-1/.

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