Shares of Mullen Automotive (NASDAQ:MULN) stock are down by about 20%, bringing its one-month loss to 52%. Today, CEO David Michery released a letter to shareholders after Mullen’s reverse split proposal in a ratio between 1-for-2 and 1-for-100 was approved at the company’s special meeting of stockholders.
Michery acknowledged that including the reverse split proposal in the meeting was an extremely hard decision in light of the company enacting a 1-for-25 and 1-for-9 reverse split earlier this year.
Michery also reiterated that he believes that the current price of MULN stock does not reflect its value, citing the company’s sales and deliveries and lawsuits against market manipulation.
MULN has a deadline of Jan. 22, 2024, to close at or above $1 for 20 consecutive trading days. Michery added that the best chance for Mullen to achieve this is if it enacts a “significantly large reverse stock split.” If Mullen is unable to accomplish this requirement, it faces delisting from the Nasdaq.
MULN Stock: CEO David Michery Releases Letter to Shareholders
Staying listed on the Nasdaq will provide Mullen with better funding and liquidity opportunities than if it was delisted to the over-the-counter (OTC) market.
“As mentioned, I did not come to this decision lightly and certainly took no pleasure in taking these initiatives, but in order for the Company to survive and prosper, which is certainly in the best interests of all shareholders, the Company needs to raise capital in 2024 to fund initiatives until such time as it is cash flow positive,” said Michery.
In the past, Mullen’s capital raising has been accompanied by shareholder dilution. This statement likely explains the large decline in MULN today.
Michery did not cast votes toward the reverse split proposal with his shares, and he disclosed that his share votes were excluded from the vote approval count.
Ultimately, Michery believes that another reverse split is in Mullen’s best interests for the long term. Another reverse split will help Mullen regain compliance with Nasdaq’s $1 minimum bid requirement, which will allow it to remain listed on the exchange and provide it with funding opportunities.
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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.
