Why is the stock of Mullen Automotive (MULN) up 25% today?

Why is the stock of Mullen Automotive (MULN) up 25% today?

MULN stock is still down by 99% thus far this year despite the rally.

For unknown reasons, Mullen Automotive (MULN) is soaring higher today.

Given the company’s sharp loss over the previous month, the gains might be explained by an oversold bounce.

Additionally, as of September 30, MULN shares had a significant short interest of 19.9%.

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Despite there being no recent company-specific news, shares of Mullen Automotive (NASDAQ: MULN) stock are flying higher by almost 25%.

In its action against numerous broker-dealers for alleged market manipulation of MULN stock, the electric vehicle (EV) manufacturer unveiled fresh court-provided deadlines yesterday. Mullen now has until November 30, and the parties to the complaint have until December 15, respectively, to jointly file their case management plan. Mullen did not elaborate on the grounds on why Judge Analisa Torres set the deadline for the new lawsuit.

Why Is Today’s MULN Stock Up?

First, an oversold rebound might be to blame for the surge. MULN fell by roughly 60% between September 25 and October 23. This fall was made worse when Mullen suggested a 1-for-2 to 1-for-100 reverse stock split at its next special shareholder meeting. The company’s stock is now trading for much less than the $1 minimum bid price required by Nasdaq, but a reverse split might be able to bring shares back up to par. It would only implement a reverse split, according to Mullen, if its shares could not reach $1 through organic growth.

The gains from today may possibly be the result of a short squeeze. MULN has a 19.9% short interest as a percentage of float as of September 30. This translates to a short position of $16.47 million on 36.28 million shares. In general, a short interest exceeding 10% is deemed high, and one beyond 20% is deemed extremely high. As a result, MULN was more likely to experience a short squeeze.

The cost-to-borrow (CTB) fee for a stock can also give investors clues about a potential short squeeze. The charge is the yearly sum that short sellers must pay in order to borrow shares. Additionally, when the demand for short sellers is great, the charge increases, and when it is low, it decreases. The CTB cost for MULN is now at 10%, which is higher than the typical CTB fee of between 0.3% and 3% but still not significantly higher.

Last but not least, some investors on social media are thinking that Nasdaq has granted Mullen another compliance delay. Till Mullen or Nasdaq make a formal announcement, this should be considered speculative. Neither company has confirmed this.

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