Mullen Automotive (NASDAQ: MULN) stock is up 68%. MULN rose as the company bought back its own stock. The aim is to get the price above the $1 minimum bid requirement so that the company can stay listed on NASDAQ. The usual reason to want to do that is because NASDAQ is where it’s possible to raise capital. A firm listed on the OTC faces much lower liquidity and thus less ability to gain access to that new capital. So, yes, trying to preserve the NASDAQ quote is logical enough.
Except it is rather odd to be expending capital in order to retain access to the ability to raise capital. But then, if we’re honest about it, we’re not great fans of the strategic ability of the management at 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,””
It’s possible to think that that’s a blip but we tend to think that a management taken in by such an idea is not, perhaps, working all that well as stewards of other peoples’ money.
Mullen Automotive stock price from Google Finance
Still, Mullen wants to meet that $1 minimum bid price. So it’s buying in stock: “Mullen Automotive Inc (NASDAQ:MULN) Thursday announced the start of the company’s $25 million stock buyback program with the repurchase of 3.7 million shares of common stock, which started on Aug. 16, 2023, and can continue through Dec. 31, 2023, for an aggregate of $3,626,000.”
A more traditional way of meeting the NASDAQ requirements is to do a reverse stock split. But tragically that’s already been done at MULN: “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.””
That is, there’s not much left that Mellen can do - well, except to start making and delivering their electric vehicles and wouldn’t that be a good joke? - to get that stock price up. Thus the stock repurchases.
