Shares of electric vehicle (EV) startup Mullen Automotive (NASDAQ:MULN) popped sharply higher on Thursday following encouraging news. Earlier today, management disclosed that the company delivered 50 all-electric Mullen One vehicles to Randy Marion Automotive Group (RMA). Additionally, it plans to ship more soon, thus providing a credibility lift for MULN stock. Nevertheless, skepticism continues to loom over the enterprise due to its heavy market losses.
According to the company’s official statement, Mullen invoiced RMA for $1.68 million. Further, the EV manufacturer anticipates shipping and invoicing a total of 285 Mullen One vehicles — which are Class 1 electric-powered cargo vans — to the same client within the next five business days. Even better for speculators of MULN stock, RMA voiced satisfaction with the cargo vans. RMA’s Fleet Vice President Brad Sigmon stated the following:
With the advance of last-mile delivery and the growth of in-home services, the Mullen ONE EV cargo van is in strong demand. The Mullen ONE is an extremely versatile offering and the diversity of interest ranges from delivery companies to municipal clients to small business operators.
In turn, Mullen CEO and Chairman David Michery expressed pride in the ability to launch and scale multiple production lines to meet customer demand.
Speculative Fervor Reemerges for MULN Stock
Since the Thursday opening, MULN stock ripped higher to 25% up, though its price chart has been a little choppy this afternoon. Over the trailing five sessions, Mullen stakeholders now find themselves up about 74%. While encouraging, much work remains in terms of keeping the momentum going.
After all, MULN stock is still down approximately 16% in the trailing month. Therefore, the only beneficiaries of the spike higher are those who, by chance, happened to acquire shares recently. That’s not exactly a reassuring strategy. However, it’s also possible that, at least in the near term, speculative fervor might continue.
Looking at data provided by Fintel, MULN’s short interest stands at 18.91% of its float. Per Investopedia, short interest above 10% is “fairly high,” indicating significant pessimistic sentiment. Further, short interest above 20% is extremely high.
Another metric worth noting is that at a leading prime brokerage, the number of shares of MULN stock available for shorting activities dropped to zero at the latest count. To be clear, that’s not indicative of all brokerages. Still, it may be a single meaningful sign that contrarian interest toward Mullen has reemerged.
Also, the short borrow fee currently stands at 82.18%, which is shown as an annual percentage rate (APR). Two days ago, the fee sat at 14.58%, potentially reflecting a short squeeze brewing.
Why It Matters
Although MULN stock now may seem intriguing for contrarian market gamblers, one point of caution is that the short interest ratio still sits at 0.07 days to cover. This figure reflects the time bearish traders need to unwind their short position based on average trading volume. Thus, it might only take about half an hour for the bears to exit, which is not a particularly stressful situation.
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On the date of publication, Josh Enomoto did not have (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.
