MULN - Mullen Automotive (MULN) stock analysis: Waiting for August 3
2023-07-26 04:30:00 ET
Mullen Automotive (NASDAQ: MULN) stock price has been in a strong freefall this year as investors remain concerned about the company’s future. The shares have crashed by more than 99% in the past 12 months.
Can Mullen Automotive survive?
Mullen Automotive has had a remarkable fall from grace as its total market cap now stands at just $86 million. This is a much smaller value than what it was valued at its peak. It had a market cap of over $700 million in 2022.
Most importantly, its total valuation is smaller than the $240 million it spent to buy Electric Last Mile Solutions and the $148 million it bought Bollinger. The stock has tumbled as investors question whether the company can continue operating as a going concern for longer.
Mullen Automotive’s biggest challenge is that its cash balances are falling and losses rising. The most recent results showed that the company’s total loss stood at over $114 million in the first quarter.
Therefore, to continue as a going concern, Mullen Automotive needs a lot of money since it ended the quarter with over $60 million in cash and short-term investments. As such, it was quite suspicious when the company recently launched a $25 million share buyback . For one, all EV companies, including the mighty Tesla , have never repurchased their shares.
The next important catalyst for Mullen Automotive stock price will be the company’s annual meeting scheduled for August 3rd. In this meeting, the company’s management will have a chance to talk about its business and the next action plan to raise cash.
In its filing with the SEC, Mullen Automotive said one of the agendas will be to request an increase of the number of outstanding shares by 52 million shares. Also, the company will seek the approval of another reverse split in a bid to maintain the Nasdaq listing. Therefore, there is a likelihood that the stock will see some volatility in the coming days.
MULN stock price forecast
MULN stock chart by TradingView
Regular readers know that I have been quite bearish on Mullen Automotive stock. I still believe that this company does not have the resources it needs to build a profitable company. As a result, my predictions of the stock have been fairly accurate.
I suspect that the stock will continue falling in the coming months and that the company could go out of business by 2024. In the near term, however, we can’t rule out a situation where a short squeeze happens ahead or after the general meeting.
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