Mullen Automotive announced the results of a shareholder vote.
All measures were passed and the market rose.
The news is good, but the outlook remains poor and could keep volatility high.
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Mullen Automotive (NASDAQ: MULN) is heating up again and the chart still looks good. The caveat is that short-selling and bearish activity remains brisk and likely to keep action volatile, if nothing else. The latest news from the company is the results of a shareholder vote that includes approval of all measures.
What this means for investors is that there are many buckets of possibilities that promise to keep the news interesting.
Mullen Automotive: good news
Mullen Automotive announced the results of the shareholders’ meeting and votes, and the market cheered. The company has approved his two most significant actions on the roster: reverse splits and share count increases. A reverse split may not happen, but if the company fails to bring the stock price back above $1, it will.
Mullen has until March 6, 2023 to get the stock back above the threshold, with a possible extension that could push the date back to early September.
It is hoped that the increased number of shares will allow the company to raise funds, capitalize production and start producing cars before the deadline is reached. In this scenario, the stock should be able to go above $1 on its own, and there are other potential catalysts.
Mullen’s I-Go is now in Europe and the first sales will be announced soon. This doesn’t provide all the funding the company needs, but it does generate returns on the books and acts as a positive catalyst for the stock price.
Mullen Automotive: bad news
The bad news is that Mullen Automotive has approved an increase in the number of shares. This will increase the number of shares available to him from 1.75 billion to 5 billion, an increase of almost 200%. As mentioned earlier, this is good news because the company has financing avenues unrelated to the bond market, but as with volatile penny stocks, it’s bad news from a shareholder perspective.
An increase in share count opens the door to significant dilution in value if the company sells even half of its new shares. Ultimately, he has 1.7 billion shares outstanding, so stock sales in the company are expected to begin in the “now” to “soon.”
Mullen Automotive: an ugly outlook
The story is good so far, but Mullen faces the toughest times. Faced with mounting oppression, he must start production and deliver cars. The bears are pitching rally by rally, and the volume is steadily increasing as the month goes on. As the company is on track to sell its shares, the combined weight of the short sale and the sale of the company could keep price action subdued if it doesn’t drop in the short term.
Marketbeat.com has short interest listed at 13.83% through official channels, up 30% from last month. Fintel lists the short-term interest rate as his 14.8% (official), while the off-exchange short-term interest rate is close to 50%. That’s an incredibly high number and this is what’s going on in the dark pools, which is why a petition was filed with his CEO David Michery to combat illegal short-selling by shareholders in recent days. .
Technical Outlook: Bulls Gaining Momentum
The battle is fierce, but Mullen Automotive’s bulls are gaining momentum. Both price action and stochastic indicators have increased support, indicating a solid bottom has formed. Since this bottom is near $0.20, it is likely to fall in the short term.
This means that institutional investors, analysts and individual investors are likely buyers at this level. In the long run, it will be news. The right “good news” will corner the bears and send the stock skyrocketing to the point where he, like other EV startups, should be trading in the low single digits.