MULN – Why Mullen Automotive Stock Cruised to a 10% Gain This Week

What happened

Companies splitting their stock, one way or another, have grabbed headlines over the past year or so. That’s not going to happen with electric vehicle (EV) company Mullen Automotive (MULN 2.44%), which was facing a shareholder vote on a reverse stock split. After it was voted down, Mullen’s stock raced to a 10% increase over the course of the week, according to data compiled by S&P Global Market Intelligence

So what

In a special meeting of shareholders held on Wednesday, Mullen conducted a vote on that reverse stock split. The result, as it officially announced, was that it “has no plans at the current time” to effect such a measure. It wasn’t immediately clear how many shareholders voted in favor and against the proposal.

Since last summer, Mullen stock has traded consistently below $1 per share, the minimum price for a stock to be listed on the Nasdaq. While maintaining a stock market listing isn’t do-or-die for businesses, maintaining a presence is vital for both prestige and for potential capital-raising efforts in the future.

Additionally, the EV maker is a component of the Russell 2000 index, which is tracked by many investors and institutions that follow small-cap stocks. Like the Nasdaq, one of the index’s requirements is that its component companies trade above $1 per share.

Now what

It’s important to remember that any stock split, standard or reverse, does not change the value of an investor’s holding or the affected company’s market cap — it only adjusts the number of shares and their price. Regardless, a reverse stock split is considered a desperation move by a business and is often executed in situations where delisting is a possibility. Hopefully, Mullen can find its way out of this ditch before long.

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