Since the end of February, shares of electric vehicle (EV) maker Mullen Automotive (MULN) have plummeted. Year to date, the stock has lost more than 77%.
During the April 21 trading session, after an almost 50% drop, Mullen traded higher again. It reached as high as $1.63 in the morning for a quick 15% spike. A few hours later, however, MULN had lost all its gains for the day — and then some.
Here are some possible reasons behind the intense volatility in Mullen stock on Thursday.
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The Tesla Effect
The world's largest electric vehicle company, Tesla (TSLA) - , easily beat market expectations when it reported its first-quarter results on April 20. The company reported a record $3.3 billion in profits for the quarter and an increase of more than $8 billion in revenue year-over-year (YoY). This excellent result surprised Wall Street experts, who had predicted further difficulties for the company due to production disruptions caused by supply-chain headwinds.
Because Tesla is a benchmark for the industry, investor enthusiasm spilled over into other EV makers, such as Mullen. Lucid (LCID) - and Rivian (RIVN) - also performed positively at first on the day after Tesla's earnings announcement.
More Buzz From CarBuzz
In late February, Mullen was featured in a . The magazine called Mullen the "real deal" and predicted that it would have the ability to stand up to major EV players in the future.
CarBuzz recently posted another piece about Mullen. This article brought up some specifics regarding Mullen's FIVE model, its differentiators, and its future perspectives.
The piece quoted CEO David Michery, who compared the Mullen FIVE to Tesla's Model S: "I believe that Mullen FIVE, to me, and to this company, is what the Model S was to Tesla. The key factor — and people don't focus on this key factor — is not about the car being electric. It's about the car being sexy, having amazing performance, and then it's electric."
But It All Came Crashing Down
The party was short-lived. Mullen stock began losing steam shortly after the opening bell. By 2:30 p.m. EST, what had been a nice daily gain turned into a loss, and the share price kept dropping from there.
It is unclear if any company-specific news helped turn the bulls into bears so quickly. Most likely, MULN fell victim to the broad-based loss of momentum that also pushed the S&P 500 (SPY) - lower from a gain of +1% early in the session to a loss of -1% by the end of it.
Behind the intraday selloff was another spike in interest rates driven in part by hawkish comments coming from the Federal Reserve. A spike in crude oil prices probably did not help, as inflationary pressures and the possibility of a recession continue to mount.
One key takeaway from this jittery day in the markets is that stocks with “meme potential” can be highly volatile. Investors and traders who choose to play this game should set their expectations accordingly.
A Top 5 Active Stock
With its popularity on the rise since the end of February, Mullen's stock has been receiving a lot of attention. Most of it is coming from retail investors and traders, due to the stock's modest float and recent positive news regarding the company's development.
During the trading session on April 21, Mullen was among the top five most active stocks in the American stock market. Its trading volume of more than 123 million implies almost half of the 284 million outstanding shares were somehow traded in just one day.
(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting Wall Street Memes)