Shares of Mullen Automotive (NASDAQ:MULN) are once again near the pivotal $1 level. This comes despite the company enacting three reverse stock splits in 2023 — 1-for-25, 1-for-9 and 1-for-100. These splits add up to a cumulative ratio of 1-for-22,500. MULN stock is down by 91% year-to-date (YTD) and 99% year-over-year (YOY).
On Friday, Mullen announced that it would resell up to 85 million shares upon the conversion of notes and the exercise of warrants. This is significant, as there were 24.85 million shares of common stock outstanding prior to the announcement. In other words, more dilution is on the way.
“The Selling Stockholders may sell a large number of shares, resulting in substantial diminution to the value of shares of Common Stock held by our current stockholders,” said Mullen.
MULN Stock Nears $1 After Filing to Resell 85 Million Shares
Mullen won’t receive any proceeds from selling stockholders selling common stock, although it may receive up to $19.8 million if all of the warrants mentioned in the resale are exercised for cash. These proceeds would be used toward general working capital.
As for the selling stockholders, the top three are Esousa Holdings, JADR Capital and Ault Lending. Esousa can resell up to 54.64 million shares, followed by JADR at 20.02 million and Ault at 5.03 million. All three entities will own zero shares assuming the sale of all of the common stock as part of the resale.
The news isn’t helping MULN stock and a trip below $1 for 30 consecutive business days would result in a Nasdaq deficiency notice, which Mullen is all too familiar with.
Mullen itself has blamed naked short selling and market manipulation for its stock decline. Last July, the company retained law firms Christian Attar and Warshaw Burstein to assist with a market manipulation investigation. Since then, both law firms have withdrawn themselves as Mullen’s counsel.
The likely reason for the fall in MULN stock isn’t complicated and is attributed to a lack of revenue and an increase in shares outstanding, which results in dilution. At the beginning of the year, there were 5.88 million shares outstanding. Compared to the current count of 24.85 million, that’s an increase of 322% in about seven months.
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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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
