Mullen Automotive's Rally Continues, Caution Advised for Potential Investors

Introduction

This analysis studies the stock of Mullen Automotive, Inc., listed on the NASDAQ exchange as MULN. The analysis focuses on both technical and fundamental aspects to predict the stock's performance on the next trading day, i.e., July 7, 2023, and for the upcoming week.
Fundamental Analysis

Mullen Automotive's earnings per share (EPS) stands at $216.43, an impressive figure even if currently the price to earnings (PE) ratio is unavailable. The market capitalization of the company is approximately $57.11 million, indicating the relatively small size of the company. The firm announced a stock buyback plan of $25 million, which is a significant aspect to consider due to its potential to influence the market sentiment positively regarding the stock. Such an announcement implies that the company believes its stock is undervalued and is investing in itself. This might explain the speedy doubling of the stock in just two days.
Positive news around the company's ability to continue has significantly boosted investors' confidence, translating to a massive rally in the stock price. The upcoming production start of Mullen's Class 3 electric vehicles (EVs) adds to the optimism surrounding this stock.
Technical Analysis

MULN experienced a significant closing price increase of 29.02% on July 6, 2023. The stock closed at $0.2205, with a daily high and low of $0.3212 and $0.2032, respectively. The volume was exceptionally high, nearing 1.88 billion compared to its average volume of 113.84 million, further supplementing the belief that there is escalated interest in the company's stock.
However, MULN's 50-day moving average ($0.897) and 200-day moving average ($5.243) are both far above the last closing price. This discrepancy might indicate the stock has been in a downtrend. The RSI (Relative Strength Index) stands at 49, being neither overbought nor oversold. The MACD (Moving Average Convergence Divergence), a trend-following momentum indicator, also suggests the stock experienced a negative momentum in the past three months.
Stock Price Prediction

Given the recent news and investor sentiment, MULN is likely to experience further price push on July 7, 2023, and the following week. However, the consistency of this rise in price will largely be determined by the company delivering on its optimistic year-end guidance and start of the production of its Class 3 EVs. Keep an eye on trading volumes for indications of continued investor interest.
Evaluation and Recommendation

Despite the current optimistic rally, prospective investors must recognize the stock’s downward tendency reflected by its significant discrepancy from its 50-day and 200-day moving averages. Additionally, the lack of a PE ratio due to the company's current zero-dollar earnings poses a challenge for evaluation.
However, considering the recently announced news of the $25 million share buyback plan, the enormous increase in the stock price, and the massive trading volumes, there is a strong case for a HOLD recommendation for existing shareholders as optimism surrounding the company increases. Yet potential investors must exercise caution due to the stock's recent volatile behavior.
While the stock presents opportunities due to the recent bullish trend, investors must be aware of the possible risks involved and should monitor the stock closely. The technical indicators suggest that this rally might need further consolidation before the stock can remove the bearish trend completely. Thus, the advice for potential investors is to wait until the stock presents clear bullish signals on a more consistent basis.