Mullen Automotive (NASDAQ: MULN) stock was up 37% yesterday. There’s no specific news to drive MULN stock higher, just a number of different and fairly slight propositions. One argument is that it’s preparing for a reverse stock split. Well, OK, that would remove, again, the delisting threat. But it’s less than three months since the last MULN reverse stock split. Which did work, but obviously only for a time. So, another one might work but for how long?
Another idea might be just that what goes down then goes up: “Mullen Automotive (MULN) is surging higher today for unclear reasons. The gains could be attributed to an oversold bounce, given the company’s significant decline during the past month.” And, OK, maybe that’s true. Maybe it’s just reconsideration and thinking it’s oversold. Although we have to admit the idea of Mullen being over-sold amuses. We’re not fans around here.
It’s even possible to mutter something about the short interest being near 20%. At which point any tick upwards can easily enough become a sefl-reinforcing spiral as those short have to cover their losses.
Mullen Automotive stock price from Google Finance
We can even go well out on a limb and wonder whether their legal action will produce some result: “The company is currently embroiled in a lawsuit against TD Ameritrade, Charles Schwab (NYSE:SCHW), and National Finance Services, accusing them of alleged manipulation of MULN stock price.” Aha, aha, just a little joke there. The suit exists but likely outcome in favour of Mullen has a rather low probability.
Our basic view of Mullen hasn’t changed. Yes, we know there have been some stock repurchases. A very odd use of scarce capital to us. But we do keep coming back to the Mullen Advanced Energy Operations story. To us that is just so transparently a scam. If Mullen internally believed it then that doesn’t say much about the management quality and what it does say isn’t good.
Essentially, sa a result of that story we simply do not believe in Mullen. And once that belief and confidence is lost it takes a lot of positive evidence - and not just interesting stories - to gain it back. Which leaves us where we are. We’re still bearish on MULN stock.