- Vanguard more than doubled its holdings in Mullen Automotive.
- Institutional activity is picking up as well.
- With so many irons in the fire, the upside risks are mounting, and the short interest is falling.
Mullen Automotive (NASDAQ:MULN) and its investors still have risks and hurdles to overcome, but, those risks aside, bullish sentiment is building in the stock. The #1 most telling news is a 13F-HR filed by Vanguard Group Inc stating a more-than-doubling of their position in the company.
According to the filing, dated 2-10-23, the company owns more than 45.67 million shares, which can be expected to grow. Likewise, the other institutions are scooping up stock shares and have helped establish a bottom and plant the seeds for a significant rally.
The latest read of Marketbeat.com’s institutional tracking tool shows 10 new institutional purchases since the 1st of the year, not including Vanguard. These 10 do include 2 purchases that were reported in the previous week and 8 new ones that have their holdings up to 6.6%%.
That 6.65% is a very small portion of the company’s stock and may get smaller due to dilution. Still, it also represents no small amount of interest in the company from big players like Citigroup (NYSE:C), UBS, and Bank of America (NYSE:BAC).
Institutional holdings are a foundational element of market dynamics and can help reduce volatility in penny stocks like this one. Penny stocks are volatile because the market is thin, it’s easy to buy lots of shares, but there are not always buyers or sellers at a given price point.
Institutional involvement at the current levels helps to establish a floor and a target where they can be expected to buy.
Catalysts Are Brewing For Mullen Automotive
Mullen Automotive has had its share of good news over the past few months, but investors now need to see more. To date, the news has comprised several positive press releases that suggest business is developing ahead of schedule. Among these catalysts is an order for vans that are expected to see deliveries begin later this quarter and the I-Go in Europe.
The I-Go was delayed in arriving in the EU due to COVID and supply-chain issues in China, but it is now in Ireland. Newgate Motors announced via its website that Mullen’s I-Go had arrived and was available for testing. There is no word yet on how many are in Ireland or how long until deliveries can be made, but this is a positive event that may lead to revenue in the current quarter.
And this news has the shorts covering their positions. The official short interest went up over the last week and is sitting near 13.5%, according to Marketbeat.com and Fintel.io. Interestingly, off-exchange short interest has fallen to about 30%, down more than 20% from its peak a month or 2 ago.
In this light, the market should expect to see short interest continue to dwindle, but, as mentioned, there are risks. Short-sellers may allow the market to advance to key resistance points and reposition with or without the aid of bad news.
Mullen Is Approaching Critical Mass
The market for Mullen Automotive is reaching a critical mass. The company has so many irons in the fire that one of them will bear fruit. The risk for bears is that more than 1 will bear fruit, and the company will attract a major OEM into its camp.
Ford Motor's (NYSE:F) Rivian (NASDAQ:RIVN) stake paid off in spades for the company last year and resulted in a special dividend worth 5% for shareholders.
Indeed this company and other OEMs like General Motors Company (NYSE:GM) are eying the market for other candidates they help cross the finish line.
The Technical Outlook: Bears Halted, Bulls Advance
The action in Mullen Automotive is getting more and more interesting. Not only have the bears been halted at the $.25 level, but support is growing, and the bulls are advancing.
The stock has retreated to the short-term EMA 3 times and bounced, with each bounce coming at a higher level than before. This is a sign that bullish speculators are more in control of the market than not and why short interest is falling.
If this trend continues, the stock should get up to $0.45 to $0.50 on the next bounce and maybe even higher if there is more news.
