On Aug. 11, Mullen Automotive (NASDAQ:MULN) conducted a 1-for-9 reverse split in order for its shares to satisfy Nasdaq’s minimum price requirement of $1. This was the stock’s second reverse split this year, as MULN stock had previously experienced a 1-for-25 reverse split on May 4.
However, time is ticking for Mullen, as it has a deadline of Sept. 5 to close at or above $1 for at least 10 consecutive business days, but generally no more than 20 consecutive business days. Between now and Sept. 5, there are exactly 10 business days. Mullen will lose out on one business day because the market will be closed on Sept. 4 for Labor Day.
The electric vehicle (EV) company also initiated a $25 million buyback program on Aug. 16 and has already used at least $3.62 million of it. However, shares have fallen by over 50% since the program was initiated.
Time Is Ticking for MULN Stock to Reach $1
With shares trading in the mid-40 cents range, MULN would have to rise by over 100% in order to reach $1. Hypothetically, the company could also explore another reverse stock split, but it would have to receive shareholder approval in advance. In addition, Nasdaq policies state that:
“If a Company’s security fails to meet the continued listing requirement for minimum bid price and the Company has effected one or more reverse stock splits over the prior two-year period with a cumulative ratio of 250 shares or more to one, then the Company shall not be eligible for any compliance period specified in this Rule 5810(c)(3)(A) and the Listing Qualifications Department shall issue a Staff Delisting Determination under Rule 5810 with respect to that security.”
If Mullen had enacted a 1-for-10 reverse split on Aug. 11 instead of a 1-for-9, its cumulative reverse split ratio would have totaled 1-for-250. In fact, Mullen can enact another reverse split, although that would make it ineligible for a compliance period if its shares fall under $1 again, and the shares would receive an immediate staff delisting determination. On top of that, the Nasdaq hasn’t stated exactly how long it will require MULN to close at or above $1, but it is at least 10 consecutive business days.
The bottom line is that time is ticking for MULN to reach $1. At this point, it seems likely that the stock will not regain compliance by Sept. 5.
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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.
