The shorts of Mullen Automotive (NASDAQ:MULN) stock are having a disastrous week. Yesterday, shares closed higher by about 65% after the electric vehicle (EV) company announced it had retained a law firm to investigate alleged naked short selling. This morning, Mullen also announced an up to $25 million stock buyback program.
The buyback program, which has already received authorization from Mullen’s board, means that Mullen will be able to purchase up to $25 million in shares of its outstanding common stock. The program will be in effect until Dec. 31 of this year, allowing MULN stock to be purchased in the open market or through privately negotiated transactions.
“We are initiating this buyback program as an attractive opportunity to deploy capital and return value to our shareholders,” said CEO David Michery.
Mullen Announces $25 Million MULN Stock Buyback Program
The $25 million buyback program is significant, as MULN closed at a market capitalization of just $44 million yesterday. In addition, MULN witnessed its highest trading day volume of 1.07 billion shares yesterday. That was more than double the previous highest volume.
At the same time, Mullen warned:
“The authorization of the stock buyback program does not obligate the Company to purchase any shares and may be terminated or amended by the Board at any time prior to its expiration date.”
The company also added that it has $235 million in cash. It believes MULN stock is “significantly undervalued” based on that cash position. Shareholders are responding positively to the news, as MULN is up about 80% during the past five trading days.
Mullen recently announced that it would book revenue of $308,000 for the quarter ending June 30, its first-ever revenue. The revenue stems from the sale of 22 EV cargo vans to Randy Marion Automotive Group (RMA). Shareholders should expect even more revenue for the quarter ending Sept. 30, as Mullen will initiate production of its Class 3 EV then. For the rest of the year, CEO David Michery has issued guidance for 660 Class 1 vehicles and 930 Class 3 vehicles. For 2024, Michery expects 368 Class 1 one-seaters, 11,000 Class 1 two-seaters and 3,000 Class 3 vehicles.
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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.
