It’s an unfortunate day for fans of Mullen (NASDAQ:MULN) stock, as the downtrodden electric vehicle (EV) maker is expected to be removed from the Russell 2000 Index. Indeed, the index’s annual reconstitution process is almost complete and Mullen will unfortunately lose its spot on the list.
What does this mean for MULN stock?
Well, likely nothing good. Mullen’s removal comes as a function of Russell’s $1 minimum closing price requirement. As part of Russell’s annual reconstitution that sees the index make changes to its division between large, mid and small capitalization stocks, Russell removes any stocks that fail to meet its $1 minimum bid price come “rank day.” This year, rank day fell on April 28. MULN closed on April 28 with a pre-split share price of roughly 8 cents.
While companies with an average closing price of at least $1 over the 30 days preceding rank day can be considered exempt from removal, Mullen unfortunately doesn’t qualify. In fact, Mullen initiated its 1-for-25 reverse stock split on May 4, after Russell’s rank day. In the 30 days before April 28, MULN’s average share price was below $1.
June 23 marks the final confirmation of the Russell 2000’s reconstitution.
MULN Stock Climbs Despite Impending Removal
Despite Mullen’s bearish removal from the Russell 2000, MULN stock is actually up today by around 1% as of this writing. The company has been on a downward slide in 2023, however: MULN stock is down more than 95% year-to-date (YTD) as it also flirts with delisting from the Nasdaq.
Indeed, while the Nasdaq has a number of procedures in place to allow companies to regain compliance with its $1 dollar minimum share price, MULN’s time may be running short. The EV maker has until Sept. 5 to regain compliance. Otherwise, it faces removal — or an additional hearing with the exchange to gain another extension.
With the company below $1 again after just conducting a reverse split, Mullen would likely have to perform another split to get back up to one dollar from its current 18 cent price point.
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On the date of publication, Shrey Dua 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.
