Mullen Automotive (NASDAQ:MULN) saw a spark of life in early trading Friday when the share price jumped 2.2% after the opening bell, before quickly returning to the red. Part of the reason for the jump appears to be encouragement that Mullen management is fighting back against NASDAQ’s delisting announcement by attempting to appeal the decision.
Mullen management announced Thursday that the electric automaker has lodged an appeal against NASDAQ’s decision to delist the company. The electric vehicle manufacturer indicated that they could potentially be granted a period of up to 180 days to take corrective measures and bring MULN's stock price into compliance with NASDAQ's listing requirements.
In the spring, the NASDAQ exchange had initially granted Mullen a six-month period to meet compliance after the company's stock price fell below the $1.00 mark. However, instead of taking immediate action to comply, the company, led by CEO David Michery, decided to dilute the stock by about 10X in order to raise more than $200 million for Mullen’s production ramp-up.
The move boosted the share price back to $1.00 in time to meet the NASDAQ requirement, but the shares quickly dipped back down below the threshold.
In May of this year, Mullen had already implemented a 1-for-25 reverse stock split to boost the value of its shares. This reverse split effectively increased the share price from $0.06 to approximately $1.50.
Given the historical price movement over the past five years, it's challenging to anticipate a significant recovery in the share price.
However, if NASDAQ's committee grants management another extension, it's reasonable to expect an artificial increase in the share price. CEO David Michery may choose to leverage this extension to execute another reverse split, which can temporarily boost the share price.
Shares of MULN are down 1.67% near end of trading Friday.