Perhaps the stock with the worst price action in recent days, Mullen Automotive (NASDAQ:MULN) is once again seeing big declines today. Shares of MULN stock are down another 13% at the time of writing, following a big decline yesterday.
This move comes despite news that the company has traded above its $1 minimum bid price requirement for 10 consecutive days after enacting a reverse stock split. This means that, at least for the near term, Mullen won’t have its stock delisted from the Nasdaq exchange.
That doesn’t mean that worries around delisting are anywhere close to dissipating. That’s because shares of MULN stock are now hovering around the $1 level once again, meaning there’s the risk of yet another reverse split being necessary in the future, unless this stock’s price action improves.
Another factor investors are weighing today is Mullen’s tripping of the Securities and Exchange Commission’s (SEC’s) short sale circuit breaker today. Mullen has been placed on the Short Sale Restriction ( ) list, which effectively bans short trading on a particular stock until an uptick is seen in its price action.
As InvestorPlace Markets Analyst Thomas Yeung eloquently pointed out, such rules are put in place to discourage nefarious activity from short sellers, who may put a company out of business, if acting too aggressively in betting against a particular stock.
Let’s dive into what investors may want to make of this recent news.
Is MULN Stock Simply Too Risky Right Now?
The fact that MULN stock hasn’t recovered in a material way after tripping the SEC’s short sale-related circuit breaker is concerning. This implies that selling pressure from owners of Mullen are a primary cause of this stock’s decline. Thus, it’s not only short sellers who are contributing to this company’s decline — it’s actually owners of Mullen’s stock looking to take losses and get out of positions.
Overall, it appears the broader market view of Mullen right now is that this is an early stage EV maker that’s far too risky of a bet. There happen to be a number of other options in this space with better fundamentals and growth outlooks than Mullen. Accordingly, as investors re-position their portfolios, it looks like Mullen is the odd company out when investors think about how they want to gain exposure to the growth of electrification.
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.