Mullen Automotive Stock Forecast: MULN price trades higher amid manipulation lawsuit

Mullen Automotive (MULN) stock rose 1% at the start of trading on Thursday, alongside the NASDAQ Composite that has risen nearly 0.5% as the market views a November interest rate hike as less and less likely. MULN shed 5.2% on Wednesday despite the announcement earlier in the week that the company was suing several of the nation’s largest brokerages for alleged stock manipulation. 

The lawsuit comes on the heels of Mullen’s inability to keep its share price above $1.00 – the level required for ten consecutive sessions leading up to September 5 in order to remain listed on the NASDAQ exchange. 

MULN closed Wednesday at $0.5641 per share.

Mullen stock news

On Tuesday, Mullen management announced the lawsuit brought through lawyers hired from law firms Christian Attar and Warshaw Burstein in the Southern District of New York. The EV automaker argues that TD Ameritrade, Charles Schwab, National Finance Services and others were “engaged in a scheme to manipulate the share price of [Mullen’s] securities.”

“I have been extremely frustrated by the performance of our stock and long-suspected illegal short-selling activities,” said Mullen CEO David Michery in a statement.

The “illegal short-selling activities” specified by Michery likely involve what is termed “naked short-selling”. This is when a short-seller bets against the stock price of a security like MULN without first borrowing the shares on the open market.

Earlier this summer, Mullen had already hinted that the lawsuit was in the making as Michery had announced the hiring of the Share Intel firm to research whether or not an illegal short-selling campaign was taking place.

None of the brokers commented on the ongoing lawsuit, for which Mullen is seeking compensatory damages. The news initially sent MULN stock up above $0.67 on Tuesday before selling off for a slight loss in the session.

The same day Mullen said it had so far spent $5.6 million of its $25 million board-approved buyback policy, which runs through the end of the year, in order to repurchase common stock. The company repurchased 2 million more shares since announcing the purchase of 3.7 million shares on August 17.

However, the repurchase scheme would seem to be too little, too late as the company needed to push its share price above $1.00 by August 23 in order to meet the strictures of the NASDAQ exchange for remaining listed. The exchange told Mullen management back in May that it would need to keep its share price above that level for ten consecutive trading sessions before September 5 in order to remain listed. Despite two reverse stock splits in 2023, Mullen has been unable to achieve price stability above the $1.00 level.