Sign InElectric vehicle company Mullen Automotive faces bearish trend and potential stock dilution
Summary
As of August 23, 2023, Mullen Automotive's stock price has increased by 68.07%, but technical indicators suggest a bearish trend, with the stock trading below its Moving Averages and showing negative momentum; while recent developments such as the CEO receiving 30 million shares and an upcoming stock dilution may contribute to the stock's depreciated price, near-term indicators indicate a potential minor bounce back, but the company's negative EPS and impending stock dilution may lower the price in the long term, leading to a recommendation to sell MULN stock while exercising caution and considering external factors.
1. Introduction
Mullen Automotive, Inc. (Ticker: MULN) is an electric vehicle (EV) company listed on the NASDAQ Stock Exchange. As of the most recent closing on August 23, 2023, the stock price was $0.8, reflecting a 68.07% increase compared to the previous trading day.
2. Technical Analysis
On a technical perspective, MULN is trading below its 50-day and 200-day Moving Averages, pointing to a bearish trend. The 50-day Moving Average stands at $0.275 and the 200-day Moving Average is at $3.69. The Relative Strength Index (RSI14) is at 31, which means the stock is nearing oversold levels and could indicate a potential rebound.
Despite its rising price, the Moving Average Convergence Divergence (MACD) stands at -0.149031, indicating negative momentum over the last three months. The Average True Range (ATR) of 25.93 is relatively high, hinting at strong price volatility.
Current support and resistance levels are at $0.79 and $0.9693, respectively. The trading volume was 113.48 million shares, which is below its average volume of 270.29 million shares.
3. Fundamental Analysis
The company's earnings per share (EPS) stands at a negative $650.56, revealing its lack of profitability. Simultaneously, the company has a price-to-earnings (PE) ratio of 0, which shows no earnings for investors relative to the stock's price.
Mullen Automotive has a market capitalization of close to $158 million, with 240.31 million shares outstanding. Analysts' consensus towards the stock is undisclosed, suggesting a restrained enthusiasm.
4. Recent Developments
Recent news indicates that Mullen Automotive, despite the disappointing stock performance, had its first commercial electric truck roll off the assembly line, implying the potential for future revenue. However, the stock has seen significant dilution recently with the CEO set to receive 30 million shares and an additional 82 million shares registered under the company's 2022 Equity Incentive Plan. This could potentially be a factor in the stock's depreciated price.
The company also conducted a 1-for-9 reverse split on August 11, 2023, to meet Nasdaq's minimum price requirement.
5. Stock Performance Forecast
Given the technical indicators, and considering the stock is nearing an oversold territory, there could be a minor bounce back in the short term, possibly raising the price near its immediate resistance level of $0.9693.
However, over the next week, the fundamental factors, primarily the company's negative EPS and upcoming stock dilution, might lower the price, potentially pushing it to test the immediate support level of $0.79.
6. Conclusion
Consequentially, with the current negative EPS, impending stock dilution, and the persisting downtrend, MULN is suggested to be a 'Sell'. However, investors are advised to consider their investment goals, risk tolerance, and market conditions before making any decisions. It is recommended that potential buyers exercise caution and fathom all external factors while making a purchasing decision. It's also vital to monitor the overall market trends and conditions, especially those related to the EV sector, given the business focus of Mullen Automotive, Inc.
