Mullen Automotive (NASDAQ:MULN) stock is currently trading below $1, but that might not be the case for long. This morning, the electric vehicle (EV) company announced that it would enact a 1-for-9 reverse stock split in order to regain compliance with Nasdaq’s $1 minimum price requirement. Mullen did not immediately disclose when the reverse split will become effective. However, it has a Nasdaq-given deadline of Sept. 5 to reach the $1 threshold.
This news comes just one day after Mullen released the results for its annual meeting of stockholders, revealing that shareholders had voted in favor of Proposal 3. Proposal 3 sought approval for a reverse split in a ratio between 1-for-2 and 1-for-100.
MULN Stock: Mullen Announces 1-for-9 Reverse Split
In addition to the reverse split, Mullen also announced that it would begin repurchasing MULN as part of its $25 million buyback program. MULN stock is currently trading close to its 52-week low of 10 cents, which is an ideal time to initiate buybacks. The purchases will begin once Mullen files its 10-Q and emerges from its blackout period.
“We believe the Company is highly undervalued and the stock buyback program represents a compelling use of our capital, reflecting confidence in our business,” said CEO and Chairman David Michery.
Back in May, Mullen announced that it had traded above $1 for 10 consecutive business days. Normally, this would have allowed the company to regain compliance with Nasdaq’s minimum price requirement. However, Mullen still remains on Nasdaq’s list of Noncompliant Companies to this day. This is because the exchange has the discretion to require some stocks to trade above $1 for more than 1o consecutive business days (but generally no more than 20 consecutive business days) in order to regain compliance. In deciding whether a stock should trade above $1 for more than 10 consecutive business days, Nasdaq considers trading volume, how much a stock trades above $1, price trend and the number of market makers that quote a stock at $1 as well as the size of their quotes.
In order for a 1-for-9 reverse split to take MULN above $1, MULN must have a pre-reverse split price just above 11.11 cents.
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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.
