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Thursday, June 1, 2023

Why the 25 for 1 Reverse Stock Split is Good for Mullen Automotive Inc (NASDAQ: MULN)

Mullen Automotive Inc (NASDAQ: MULN) was in a big uptrend over the past 2 days as the Company put out a number of solid press releases including the $63 million purchase order for 1,000 Class 3 EV low cab forward trucks from Randy Marion, production news coming out of Mishawaka, Tunica, and Bollinger, and the second fleet order from UNC Charlotte for 8 more EV Cargo Vans. To date, Mullen has received $263 million in purchase orders for Mullen Class 1 and Class 3 EV Vans and Trucks from Randy Marion Automotive Group. 

On Wednesday MULN’s upward momentum went up in smoke when Mullen announced the 1 for 25 reverse stock split. After hitting a high of $0.088 Mullen dropped to $0.06 and closed at $0.0639, down 21% on the day. On Wednesday the stock is expected to open at $1.59. The Reverse Stock Split is primarily intended to bring the Company into compliance with the $1.00 minimum bid price requirement for maintaining its listing on Nasdaq, We will be updating on MULN when more details emerge so make sure you are subscribed to newsytrends.com by entering your email below.

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While everyone seems to think that the reverse split will result in a lower price per share this is certainly not always the case. If we really examine the issue, we come to an entirely different conclusion. Yes, in almost all cases when a non-revenue co with a history of dilution does another RS it almost always ends in more downside. And this is the only logical outcome; if management is doing a reverse split so they can continue to further dilute shareholders why would any shareholder not sell. 

However, at the other end of the spectrum when an established Company such as Mullen who is now entering production and is starting to book significant revenues, it is an entirely different story. Many times, when an established Company such as Mullen does a reverse stock split there is a significant move to the upside.  

As we reported several days ago institutional investors were increasing their positions last week; The Vanguard Russell 2000 Index Fund Institutional shares increased their position by 6.52% and they were not alone. Currently there are 212 institutional investors in Mullen that own over 100 million shares of MULN. These institutional investors are not stupid, and they were well aware MULN would need to initiate a reverse stock split to stay on the Nasdaq. This reverse split was not a surprise to anyone, it was approved by shareholders in January. 

So, I reject the general consensus that is going around that the reverse split will result in a dropping PPS; on the contrary this reverse split could be the catalyst that takes Mullen to the next level. 

Mullen has been busy; Last week Mullen began the installation of the EMM technology on 40 Bolts in DC after Mullen was awarded the $680,000 federal contract agreement with the District of Columbia. In March 2021, Element Materials Technology conducted specific vehicle testing on 2020 Chevy Bolts installed with EMM units, with test results indicating a calculated increase in range from 269 to 431 miles; a 60% increase in efficiency. According to Mullens own testing of the EMM technology on its Class 1 EV Cargo Van, there was a 75% increase in range for the 42-kWh lithium-ion battery pack. 

Mullen announced last Friday it is taking certain affirmative steps in light of the extraordinary trading volume which is not surprising after this week and evidence of unusually high levels of failure to deliver (FTDs) on short sales as reported to the SEC. Mullen has retained outside counsel which will be working with  Shareholder Intelligence Services LLC (ShareIntel) to conduct a comprehensive analysis of data derived from broker-dealers, clearing firms and other sources to provide actionable intelligence on potential market manipulation and illegal short selling. 

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As we have been reporting Mullen is perfectly positioned to get U.S. Federal Government contracts. Mullen has teamed up with Rapid Response Defense Systems (RRDS) to fast-track Federal Government opportunities for potential large-scale vehicle fleet orders. RRDS is one of the country’s leading small business federal contractors, that has executed over 2,500 federal government delivery orders since 2014. Rapid Response holds a prime seat on 12 Indefinite Delivery/Indefinite Quantity (IDIQ) federal contracts with a combined funding ceiling of $4 billion. In March RRDS was awarded a $2.7 billion federal fleet vehicles IDIQ Contract by the General Services Administration (GSA) (IDIQ Contract # 47QMCA22D000T). Mullen is now working closely with RRDS in meeting the demand for EVs across the U.S. government’s fleet of vehicles. With the federal government’s strong interest in electrifying a growing portion of its vehicle fleet, Mullen’s commercial portfolio is very well positioned for major federal government contracts. Mullen’s Class 1 EV cargo van is currently the ONLY class 1 EV van in the market, and it is 100% electrified.

As we have reported Mullen is ramping up for production of its commercial vehicle’s classes 1-6. At the Company’s 650,000 sq. ft. of manufacturing facility in Mishawaka, Indiana, Mullen will manufacture the Mullen Five as well as the Bollinger B1 and B2 at its 120,000 sq. ft. turn-key engineering and Advanced Manufacturing facility on 100 acres in Tunica, Mississippi. Mullen provided an excellent update on production in today’s press release here. 

Both Mullen and Bollinger are showcasing EVs at ACT (Advanced Clean Transportation Expo) that started on May 1 and ends on Thursday, at the Anaheim Convention Center. Mullen is showcasing its Mullen ONE Electric Cargo Van as well as the Mullen THREE Electric Low Cab Forward while Bollinger is showcasing its Class 4 All-Electric Cargo Truck. https://www.actexpo.com/vehicles  We will be updating on MULN when more details emerge so make sure you are subscribed to Newsytrends.com by entering your email below. 

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Disclosure: we hold no position in MULN either long or short and we have not been compensated for this article.

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