Mullen Automotive's Uncertain Future Raises Caution Despite Recent Developments

Fundamental Analysis

Mullen Automotive, Inc. (Ticker: MULN) closed at $0.13 on August 01, 2023, exhibiting a marginal decline of 0.46% from its previous close. Despite this dip in price, interesting developments have been noted regarding the company's operations.

One such significant development is tied to Mullen's majority-owned entity, Bollinger Motors, which secured a $3 million grant from Michigan's state government on July 26, 2023. This injection of capital is expected to fuel job creation, highlighting the automaker's commitment to expansion and promoting economic growth within the state. This development led to an initial 1.2% rally in Mullen's stock.

Another report on July 25, 2023, revealed Mullen's announcement of a new pilot program, to be conducted in collaboration with the Shoshoni Native American Tribe of Northern California and Nevada. This partnership suggests Mullen’s dedication to broadening its consumer base and exploring diverse markets.

However, despite these positive advancements, Mullen’s stock has significantly plummeted by 99% over the past 12 months. This downward trend raises questions about the company's stability and long-term performance.

The recent EPS for Mullen is $282.57. However, the PE ratio is at 0, which is an irregularity — this usually implies that the company's earnings are negative or there were no earnings. Further, the company's market capitalization hovered around $79.14 million, reflecting a small-cap enterprise.

Technical Analysis

On a technical front, the stock's Relative Strength Index (RSI 14) stands at 41, approaching oversold territory, which might suggest possible buying opportunities. However, significant drops in both the 50-day and 200-day moving averages, currently at $0.34 and $4.42 respectively, indicate short-term and long-term down trends in the stock’s price.

Meanwhile, the MACD (3-month) was reported at -0.005768, decrepitly suggesting a bearish trend. This, combined with the below-average volume of 37.22 million compared to the average volume of 227.58 million, exhibits a reduced trading interest in this security, which could lead to low liquidity and high volatility.

Outlook and Recommendation

Given the current technical and fundamental factors, Mullen's future seems unstable. The lack of a PE ratio combined with the freefall of stock price over the past 12 months represents high risk. Notwithstanding the company’s positive operational developments, such as the Bollinger Motors grant and the new pilot program, the current stock performance suggests caution.

For the next trading day, August 02, 2023, the stock is expected to remain volatile due to its current low price and potential overselling. Over the course of the upcoming week, the stock's trajectory will likely continue to be influenced by the overall market sentiment towards small-cap companies and industry-specific news. Unless there's significant positive news or earnings beat, short-term recovery seems unlikely.

Presently, Mullen Automotive should be considered as a Hold. Despite its compelling developments and prospects in the electric vehicle sector, the stock’s overall technical and financial health appears fragile. Considering the high risk involved, prospective investors might want to wait and monitor to see if the company's stock stabilizes and begins an upward trajectory. Current investors may want to hold and wait for improved market conditions.