Sign InTechnical Analysis Reflects Bearish Sentiment for Mullen Automotive Inc. (MULN)
Summary
Mullen Automotive Inc. (MULN) recently closed near its year-low of $0.1, indicating a bearish sentiment, and technical indicators suggest further downside with a potential short squeeze or bounce-back as the stock approaches oversold territory, while the fundamental analysis reveals a company in financial distress with negative EPS and lack of profitability, leading to a 'Sell' rating and cautionary stance for both long-term investors and short-term traders. (Analysis conducted on December 11, 2023)
Technical Analysis
Mullen Automotive Inc. (ticker: MULN) recently closed at $0.148, which is near its year-low of $0.1, reflecting a bearish sentiment in the market. With a significant decline from its year high of $12, MULN is experiencing a severe downtrend. The stock's Relative Strength Index (RSI14) is at 36, indicating that it is approaching oversold territory but has not crossed the typical threshold of 30, which might suggest a potential reversal or bounce-back.
The 50-day moving average (MA) of $0.277 and the 200-day MA of $1.1198 portray a negative trend, as the current stock price is well below these key indicator levels. The Moving Average Convergence Divergence (MACD) stands at -0.040155, further confirming the bearish momentum in recent times. As for the Average True Range (ATR), the volatility seems very high at 18.11, which might lead to unpredictable price movements in the near term.
The volume traded on the last day was 82.64 million shares, substantially higher than the average volume of 49.06 million, hinting at increased investor attention. The lack of evident support levels suggests that the stock has the potential to move lower, while the resistance at $0.1635 might cap upside movements.
Fundamental Analysis
The fundamental perspective of MULN is bleak with an EPS of -$319.08, indicating the company is not currently profitable. Additionally, with a PE ratio of 0, the stock does not have earnings to back its price, making traditional valuation methods challenging to apply. The market capitalization stands at approximately $52.88 million, which is relatively small, potentially increasing its vulnerability to market volatility.
Looking ahead, the DCF valuation of $0.1447 is slightly below the last close, suggesting that the stock might be slightly overvalued or fairly valued at the current price level, depending on market sentiment.
Recent news shows that MULN is involved in litigation accusing several broker-dealers of manipulative 'spoofing' practices. This lawsuit follows a dramatic drop in the stock price over the past year, and a win in court could potentially restore some investor confidence. Furthermore, MULN is heading towards a special stockholder meeting on December 15 to vote on a reverse stock split, which typically signals that a company is attempting to increase its stock price and maintain compliance with exchange listing requirements.
The news of the reverse stock split can be a double-edged sword. It may lead to a temporary boost in stock price due to reduced share count, or it may be viewed negatively if perceived as a move of desperation to shore up stock price by financial engineering rather than organic growth.
Overall, the fundamentals do not paint a rosy picture for MULN as they reflect a company in financial distress, as evidenced by their EPS and the potential for continued dilution.
Stock Performance Predictions
For the next trading day on December 11, 2023, it is difficult to predict a positive outcome for MULN, considering the bearish technical indicators and challenging fundamentals. Investor sentiment might be slightly pessimistic as they await the outcome of the reverse stock split vote, providing additional headwinds for the stock.
For the upcoming week, volatility is expected to remain high, given the company's news and upcoming stockholder meeting. The bearish trend might continue but look for signs of a potential short squeeze or technical bounce-back if the stock reaches too deeply into oversold territory, which may lead to a short-term rally.
Overall Evaluation and Stock Rating
Based on technical and fundamental analysis, the rating for Mullen Automotive Inc. would be 'Sell.' The downward trend in price, unfavorable key moving averages, dilutive financial moves, litigation distractions, and lack of profitability contribute to this evaluation. While the upcoming stockholder meeting creates an uncertain variable, the path to financial stability and growth is not clear for MULN.
Long-term investors would likely steer clear of the company due to its significant uncertainties, and any short-term traders interested in the stock should proceed with caution, given the high levels of volatility and risk. The negative sentiment stemming from the possibility of ‘stocks going to zero’ also adds to the cautionary stance towards MULN stock.
