don’t say you weren’t there warned.

Two months ago, almost to the day, like mullen automotive (NASDAQ:MULN) as the share price fell below $0.20 per share and showed no signs of slowing, David Michery, CEO of the electric vehicle startup, told investors that while Mullen would “do everything possible to recover compliance to meet Nasdaq’s requirement of a $1 minimum offer price,” things were not looking good. “If Mullen’s shares do not trade above $1 for a minimum of 10 consecutive business days prior to September 5, 2023 ”, said Michery, “the Company will implement a reverse stock split to cure the Deficiency before” said date.

And now that moment has come.

On Wednesday, May 3, Mullen announced that it will implement a 1 for 25 reverse stock split, which went into effect today. And if you own Mullen stock right now, here’s what that means for you:

Take all the shares of Mullen you thought you owned yesterday and divide by 25. If you owned 100 shares on Tuesday, you would only have four shares on Thursday. If you had 100,000 shares yesterday, tomorrow you will have 4,000.

On the bright side, of course, those shares will be worth more than the $0.06 they are today (25 times as much, actually, or about $1.50 a share), since Mullen’s stock price automatically adjusted. 25 more times. The question is: how long will they stay at $1.50?

You see, the only reason Mullen has stuck to the reverse stock split option is because Mullen has done his “best efforts” to fix his business and get his share price back above $1 organically, and these best efforts have failed utterly. Now that Mullen has admitted his failure, many investors are likely to be forced to come to the same conclusion.

In fact, it could be said that many of them have already come to this conclusion. Mullen’s shares fell 18% on Thursday after the announcement.

Investors sold Mullen’s shares despite Mullen boasting, several hours before making the reverse split announcement, that he has $116.1 million in cash on hand and has $263 million more worth of orders in hand for the sale of “Mullen Class 1 and Class 3 EV Vans and Trucks” to Randy Marion Automotive Group. Add those two numbers together and sounds Like Mullen’s stock, which has a market capitalization of just $242 million, you should soon have over $1.50 in the bank for every $1 your shares are worth!

Except for the fact that Mullen spends $85 million in cash a year. And except for the fact that before he can sell $263 million worth of electric vehicles, he must first buy all the parts and raw materials needed to build them.

Unfortunately for Mullen, it now appears that investors are finally taking a hard look at the caveats behind this company’s numbers. And it seems they are concluding that Mullen Automotive is just another bankrupt EV maker, with nothing but promises to sell, and investors who are tired of buying the hype.

Overall, MULN has a Smart Score of 2 (out of 10) on TipRanks, which means it is likely to underperform the market. (See MULN Stock Analysis)

smart scoring is TipRanks’ proprietary quantitative stock scoring system that evaluates stocks on eight different market factors. The result is based on data and does not involve any human intervention.

To find good stock trading ideas at attractive valuations, visit TipRanks’ The best stocks to buya tool that brings together all of TipRanks’ stock insights.

Disclaimer: The opinions expressed in this article are solely those of the noted analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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