Just two months ago, Mullen Automotive (NASDAQ:MULN) had a near-death experience. With its share price mired deep in the single digits — just $0.06 per share — the penny stock electric vehicle start-up was perhaps mere days away from being delisted by the Nasdaq. In a last gasp maneuver, though, on May 4 Mullen executed a 1-for-25 reverse share split that briefly lifted its share price up past the Nasdaq’s $1 threshold for avoiding a delisting order.
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It didn’t last long, however.
$1.50 a share. $1.40. $1.20. $0.80. $0.60. As the days and weeks rolled on, Mullen’s stock price spiraled steadily lower, until by July 3 last week — the day before Independence — Mullen seemed on the verge of becoming a single-digit penny stock once again, its former $1.50 share price reduced to a mere $0.10, as investors saw 93% of their stock’s value wiped out post-reverse split.
But then, a miracle happened — or at least a handful of press releases promising a miraculous recovery.
On July 5, the day after Independence Day, Mullen announced it had hired not one but two separate law firms to “investigate … illegal naked short selling of its common stock” and prosecute any “broker-dealers, market-makers, hedge funds, and asset-based lenders” engaged in such shady dealings that might rise to the level of “market manipulation.”
One day later, Mullen pulled the trigger on its second barrel, announcing it would spend $25 million of its own cash buying back “from time to time” its own stock. On the one hand, this buyback would potentially “squeeze” the aforementioned ill-deed-doers and potentially create a short squeeze that would lift the stock’s price. On the other hand, Mullen argued that buying back its stock — valued at only $60 million or so — was an excellent business decision given that Mullen possessed “approximately $235 million” worth of cash on its balance sheet.
Investors certainly liked the idea. Within two days of this second announcement, Mullen’s stock price more than doubled to a nosebleed price of… $0.22 a share. And while it’s given back some gains since, at Thursday’s opening price of nearly $0.16, Mullen stock still retained a 60% gain over what it was worth before management began hiring lawyers and deploying cash to buy back stock.
On Wednesday, Mullen finally fired the third barrel of this oddly shaped PR shotgun: announcing it has invented a “PowerUP” mobile EV charging truck that can travel to an empty EV on the highway and provide roadside assistance in the form of “DC fast charge and level 2 charging” to stranded motorists. (The PowerUP vehicle is available for “immediate sale” by the way … albeit only on an “advance order basis,” in case you happen to be interested in buying one).
And Mullen Automotive would really like someone to buy one (or more), because sales of its other EVs are off to a pretty slow start. “How slow,” you ask? Well at the end of June, Mullen thought the sale of just 22 EV cargo vans to existing customer Randy Marion Automotive Group — at a purchase cost of just $14,000 apiece — was sufficiently big news to justify issuing a press release about it.
In total, this works out to $308,000 in revenue for the company — Mullen’s “first recorded revenue” ever, as management admits — and gives the company a price to sales ratio valuation of… 314.
According to TipRanks, MULN has a Smart Score of 1 (out of 10), meaning that the stock is likely to resume sinking. (See MULN stock analysis)
Smart Score is TipRanks’ proprietary quantitative stock scoring system that evaluates stocks on eight different market factors. The result is data-driven and does not involve any human intervention.
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