- Mullen announced the decision to acquire battery equipment and IP from Romeo Power.
- MULN stock gained more than 5% on Monday.
- CEO David Michery is in the middle of an appeal to remain listed on the NASDAQ exchange.
- MULN stock could be delisted as soon as September 15.
Mullen Automotive (MULN) stock jumped more than 16% at the open on Tuesday to above $0.51. MULN has finally begun to develop an uptrend following the $3.5 million purchase of battery manufacturing equipment from Romeo Power, which was announced on Monday.
A statement from the company says the deal gives Mullen “equipment, inventory, and intellectual property for high-volume EV (electric vehicle) battery pack and module production.”
Mullen stock news: Romeo Power deal could lead to better production momentum
The agreement gives Mullen access to equipment that will help it increase battery pack assembly lines, as well as increase its battery research & development capabilities.
“Purchasing the Romeo assets is consistent with our battery pack production path and previous announcements for our high voltage facility in Monrovia. Overall, this purchase further enhances our capabilities for battery pack production right here in California and the US,” said David Michery, founder, chairman and CEO of Mullen.
The EV company will integrate the new equipment with its ongoing facility in Monrovia, California. The company already builds battery packs and modules in Monrovia but says the new equipment will allow it to become less reliant on third-party supply chains.
The company has recently been reeling from NASDAQ’s announcement that it has chosen to delist MULN common stock from its exchange due to the well-telegraphed criterion that listed companies need to keep their share price above $1.00.
Mullen leadership knew since May of this year that it needed to maintain the $1.00 threshold for the 10 sessions leading up to the September 5 cutoff date last week. Instead, the share price dropped precipitously from the $1.00 price level down to below $0.50 during that time period.
Mullen has appealed for an extension from the NASDAQ committee that governs delistings, which could give it as much as 180 days to comply with the listing criteria. However, if the appeal fails, then MULN stock might end up trading on the pink sheets on or after September 15.
Penny stocks FAQs
Originally, penny stocks were any stock that traded for less than $1, i.e. pennies. The Securities & Exchange Commission has since altered the definition to include any stock that trades for less than $5. Penny stocks are typically associated with small companies that have either experienced poor results, sending their share price down, or with companies who dilute their share price by issuing lots of shares over time in order to fund operations or acquisitions.
Some penny stocks trade on respected exchanges, such as the NASDAQ or the NYSE. Examples of these are Mullen Automotive (MULN) and Bark (BARK). Those exchanges have requirements though. For the NYSE, listed stocks must have 1.1 million publicly traded shares outstanding with a market value of at least $40 million. The NASDAQ requires a share price minimum of $4, a minimum of 1.25 million shares and a market cap of $45 million. Most penny stocks, however, trade on the OTC (over-the-counter) market. This may mean the OTC Bulletin Board or the privately-owned OTC Markets Group.
Quite often the sharpest movers on any normal trading day are found among penny stocks. This is because non-penny stocks tend to have more liquidity, and the market is more certain about larger companies’ long-term values. Penny stocks are illiquid, meaning there is little supply available if an announcement drives more buying demand into a particular stock. There are no market makers that hold large amounts of penny stocks just to dispense them at a slightly higher price point. Additionally, most of these penny stocks suffer from a news desert where few market players know anything relevant about them. This is why a small biopharma company can issue news about a successful drug trial and immediately rocket 500% higher, with no analysts on Wall Street covering it.
Typically, the answer is “No”. Penny stocks are more risky than higher-priced stocks on average. Penny stock investors have a higher chance of losing their capital by investing in weaker companies. There is a reason why they are penny stocks in the first place, which is that largely the mainstream market is not interested in investing in them. Two groups of investors tend to focus on penny stocks, however. The first group are day traders, who know that the lack of liquidity in penny stocks could lead to extremely large swings over a short time period. The other group is made up of investors who like the fact that these stocks are disregarded. This allows these investors to gain an advantage by benefiting from upcoming announcements, because the larger market is not paying attention.
Mullen stock forecast
MULN stock added 5.8% on Monday and is advancing 2.3% in Tuesday’s premarket. This is a rather good sign as the NASDAQ 100 futures are down 0.3%, so this has nothing to do with the overall market sentiment.
Mullen stock could be in the early innings of a resurrection in share price. Thus far, it has managed to remain above the August 23 low at $0.39. The 9-day Simple Moving Average and the 21-day SMA need to be conquered at $0.48 and $0.65, respectively. From there, an overthrow of the $0.90 support level from June will bring bulls back into the trade.
MULN daily chart
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