Mullen Automotive (NASDAQ: MULN) stock is up 820% this morning. MULN rising will please those who have lost so much money in it over the past year - like, 99% of the money they started with 12 months ago. Sadly, that pleasure will be short lived as people realise this is, in fact, a purely nominal price change. The real value of any stockholding in Mullen has, in fact, just fallen again, by 8%.
We’ve had our worries around here about Mullen: “Mullen Automotive (NASDAQ: MULN) might have crossed that line from being a not very successful electric vehicle company to being an outright scam. Or, perhaps, have done something that makes it obvious that it has. This would not be a good thing of course although give the performance of the stock over the past 12 months it perhaps doesn't make all that hugely much difference.
The reference is to a contract with the government of Washington DC. Here's Ars Technica on it: “The District of Columbia has signed a $680,000 contract for an impossible-sounding gadget that claims to increase the range of an electric vehicle by 60 percent. The contract was signed in May, but it mostly slipped under the radar until it was picked up by WUSA9 this month…..The device's inventor, Lawrence Hardge, claims that it works by "rejuvenating the battery," which sounds as close to a load of nonsense as I've heard in some time,””
Our opinion - note, opinion - is that by the time people start doing that sort of thing the rot has well and truly set in and there’re few who come back from that position.
Mullen Automotive stock price from Google Finance
Today’s price move though is a purely technical one. As the NASDAQ announcement says: “Mullen Automotive, Inc. (MULN) will effect a one-for-nine (1-9) reverse split of its Common stock. The reverse stock split will become effective on Friday, August 11, 2023.”
The price should, mechanically, rise by 900%. That’s the purely nominal price change of course. But the actual price change has been 820% so far. That is, an 8% decline from where it should be from that mechanical and nominal change as a result of the reverse stock split.
Ourselves we think Mullen is going to zero and the only interesting things are where it will go first and how long it takes to reach that final destination.
