MULN Stock Alert: Why is Mullen down 10% today?

Mullen Automotive (NASDAQ:MULN) the stock is down another 10% today, bringing its year-to-date (YTD) loss to almost 90%. It comes after the electric vehicle (EV) company launched a 1-for-25 reverse stock split to regain the $1 threshold required by Nasdaq. After the reverse split, the shares moved above the $1 price level, but are back below $1.

The uncertainty of Mullen’s compliance worries shareholders. According to the Nasdaq, regaining compliance means trading at $1 or higher for 10 consecutive business days. In a recent press release, Mullen confirmed that MULN stock has traded above $1 for 10 consecutive business days, from May 4 to May 17. a result of it.

However, in certain situations, the Nasdaq may require a company’s stock to trade above $1 for more than 10 consecutive business days:

“[C]compliance is generally achieved by meeting the requirement of a minimum of ten consecutive working days. However, staff may, at their discretion, require a company to meet the applicable price-based requirement for a period longer than ten consecutive working days, but generally not longer than 20 consecutive working days, before determine that the company has demonstrated an ability to maintain compliance over the long term.

Additionally, Nasdaq’s list of non-compliant companies has consistently marked Mullen as non-compliant.

MULN Stock: Why is Mullen down 10% today?

The Nasdaq considers several factors when determining whether a company should trade at $1 or more for more than 10 consecutive business days, but generally no more than 20 consecutive business days. These include, but are not limited to, price trend, compliance margin, trading volume, and “Market Maker Mount”.

First, Mullen’s price trend is evident downward. Next, compliance margin refers to the amount of shares traded above $1 per share. Meanwhile, trading volume should not be an issue here, as the average daily trading volume for MULN is 16.74 million shares. Finally, the “Market Maker Mount” refers to the number of market makers listing a stock at or above the required minimum price, taking into account the size of their quotes.

The weight of each of these factors is not specified by the Nasdaq. However, it appears that the exchange may have used its discretion to require MULN to trade at $1 or more for more than 10 consecutive business days, given Mullen’s inclusion on the non-compliance list. A request of InvestorPlace to Nasdaq regarding the compliance status of MULN stock was not immediately referred.

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At the date of publication, Eddie Pan held (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.