Negative Technicals, Positive Fundamentals - Should You Hold on to MULN Shares?

Fundamental Analysis

Mullen Automotive, Inc. (NASDAQ: MULN) has a market capitalization of $83.51 million, with outstanding shares tallying up to 643.38 million. The fundamental valuation metrics, earnings per share (EPS) stands at 282.57, yet the price to earnings (PE) ratio, a measure of valuation, is 0. This suggests that the earnings are not high enough to justify the stock’s current market price.

However, there are more optimistic developments for the company. Mullen Automotive is primarily engaged in the electrical vehicle (EV) industry, a sector expected to see tremendous growth over the upcoming years and decades. The news of a $3 million grant from the state of Michigan for job creation in Mullen's majority-owned Bollinger Motors has likely put the company in a favorable light. Additionally, the launch of a pilot program for its Mullen ONE Class 1 EV cargo vans and Mullen CAMPUS delivery utility vehicles with the Shoshoni Native American Tribe of Northern California and Nevada indicates growth initiatives and potential future sales.

Technical Analysis

The technical picture for MULN is somewhat grim. The stock's most recent close at $0.13 on July 31, 2023, represents a notable decline from the 50-day moving average of $0.39 and a drastic dip from the 200-day moving average of $4.48. This steep downward trend is concerning and suggests continued bearish momentum.

The Relative Strength Index (RSI) is well into the oversold territory at 26, indicating that the stock could be oversold, leaving room for a potential price reversal. Also, the moving average convergence divergence (MACD) three-month value is negative, hinting at strong downward momentum.

Prediction and Recommendation

Considering the fundamentals and technical aspects, predicting the stock price for MULN in the short-term is relatively complex. However, based on the current oversold conditions, a possibly positive movement may occur in the next trading day, August 1, 2023.

Over the course of the next week, the stock could show signs of stabilization. The positive developments with the $3 million grant and launching of a pilot program could potentially offset the negative impact of its downward price trend, especially if investors view such news as positive catalysts that could steer the company towards growth.

In conclusion, despite the unfavorable price dynamics and technical indicators, MULN's positioning within the EV industry and recent funding news create potential future growth opportunities. Therefore, it might be advisable to hold MULN shares for now, pending further analysis of subsequent price movements and up-to-date news pertaining to the company. Potential investors should act with caution and perform diligent research. Existing investors might consider holding onto their shares, maintaining optimism for a potential turnaround in MULN's performance.