Mullen Automotive (MULN:NSD) Why is the Stock Surging in After Hours Trading?

MULN stock

Mullen Automotive, a California-based electric vehicle (EV) manufacturer, saw its stock rise by a whopping 21 percent during after-hours trading on April 20, 2023. This sudden surge in Mullen’s stock price came as a surprise to many investors, and it has left people wondering what could be behind this unexpected increase.

One possible explanation for this rise in Mullen’s stock price could be the recent announcement of a new partnership with a major automotive manufacturer. Mullen has been working on developing its EVs for several years, and this partnership could help the company scale up its production and reach a larger market.

Another possible factor contributing to Mullen’s stock price increase could be the growing demand for electric vehicles. As consumers become increasingly concerned about climate change and environmental sustainability, many are looking for alternatives to gas-powered cars. EVs are seen as a more eco-friendly and sustainable option, and Mullen’s electric cars could be well-positioned to capitalize on this trend.

Mullen has also been making headlines recently for its innovative designs and advanced technology. The company’s flagship vehicle, the Mullen MX-05, boasts a range of over 400 miles on a single charge and can go from 0 to 60 mph in just 2.5 seconds. These impressive specs have garnered attention from both consumers and investors alike, and it’s possible that this buzz is contributing to the recent rise in Mullen’s stock price.

Short Squeeze

However, the most likely reason that the stock is surging isn’t because of the company’s fundamentals but rather because of a technical short squeeze.

A short squeeze occurs when investors who have shorted a stock – that is, have borrowed shares and sold them with the hope of buying them back later at a lower price – and are forced to buy back the shares at a higher price than they expected. This usually can happen when positive news about the company causes other investors to buy the stock, driving up the price and forcing the short sellers to cover their positions.

It’s likely the case, that the reason behind Mullen’s possible current short squeeze is because the stock has been falling since the beginning of February, and the current 20 percent surge has been caused by a knee jerk reaction, which occurred by the closing of short positions, upon which triggered algorithms to start a buying frenzy, panicking shorts further and escalating the move.

Another interesting component to the possible squeeze could be the rumour that has just started circulating about a Saudi enterprise placing a $5 Billion order or investment in Mullen.  There is no factual basis for this rumour, from which this could just be a fabrication, however it’s stirring emotions and creating a buying frenzy, as volume is also surging.

While a short squeeze can result in a sudden surge in a stock’s price, it is often a temporary phenomenon that does not reflect the underlying fundamentals of the company. As such, it’s too early at this point to suggest that the current move in the stock is based on any merit.

MULN Ratings by Stock Target Advisor

MULN Stock Forecast & Analysis

Mullen Automotive Inc’s average analyst target price is USD 0.53 over the next 12 months, with a strong buy rating. Stock Target Advisor’s analysis is bearish based on 2 positive signals and 6 negative signals. The stock price is currently at USD 0.09 and has experienced significant drops over the past week, month, and year.

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