Why Mullen (MULN) Stock Is Shaking Off Tesla’s EV Plunge Today thumbnail

Why Mullen (MULN) Stock Is Shaking Off Tesla’s EV Plunge Today

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MULN stock - Why Mullen (MULN) Stock Is Shaking Off Tesla’s EV Plunge Today

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Shares of Tesla (NASDAQ:TSLA) are continuing their decline lower following the release of the electric vehicle (EV) company’s fourth-quarter deliveries. During the quarter, Tesla delivered a total of 405,278 vehicles, which fell short of the average analyst estimate of 420,760 vehicles. While deliveries rose by an impressive 40% year-over-year, it’s evident investors and analysts were expecting more.

That’s led to an abysmal day for many electric vehicle companies, such as Rivian (NASDAQ:RIVN) and Lucid (NASDAQ:LCID). On the other hand, shares of Mullen Automotive (NASDAQ:MULN) have been extremely resilient today and closed higher by more than 11%. So, what makes MULN stock the lucky odd one out?

MULN Stock Rises Despite Tesla Miss

First, it should be noted Mullen’s cost to borrow (CTB) fee has risen by more than 8,000% in the past few weeks. A higher CTB means that short seller demand is increasing, and lenders must charge a higher fee as the availability of short shares become scarce.

“An increase in stock borrow rates may force (squeeze) some short sellers into closing their positions — getting out to realize their remaining mark-to-market profits and exiting before other buy-to-covers drive the stock price up,” explained S3 Partners analyst Ihor Dusaniwsky.

As of Dec. 15, MULN carried a significant short interest as a percentage of float of 43.5%. With a rising CTB, these short sellers may be covering their positions by buying shares of MULN, which in turn could drive up the price of the stock. So, a short squeeze may be responsible for today’s price gain.

Meanwhile, the emerging EV company has big plans for the New Year. Last month, Mullen announced that it had received an order agreement from Randy Marion Isuzu worth about $200 million. The agreement will see Randy Marion purchase 6,000 Class 1 EV cargo vans, with the first deliveries starting this quarter.

On top of that, production of the highly anticipated Five is expected to begin during Q4 of this year. Mullen noted its acquisition of Electric Last Mile Solution’s (OTCMKTS:ELMS) Indiana facility will accelerate production of the Five, as well as Bollinger Motors’ B1 and B2 retail vehicles, by “12-plus months.”

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On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Eddie Pan specializes in institutional investments and insider activity. He writes for InvestorPlace’s Today’s Market team, which centers on the latest news involving popular stocks.