Mullen Automotive Stock News and Forecast: MULN slumps to fresh six-month lows

• Mullen Automotive stock sheds another 6% on Monday. 
• MULN stock is off roughly 35% over the past month.
• Mullen has been approved to increase its share count to 2.25 billion.

Update: Mullen Automotive (MULN) accelerated its five-day losing streak and hit a new six-month low of $0.70 before recovering slightly to end Monday at $0.71. Despite the minor pullback, MULN stock price eroded 6.14% on the day, as the emerging Electric Vehicle (EV) maker’s burning through cash at an alarming pace is not going down well for its production ramp-up. Earlier this month, the company reported its earnings results for the third quarter, showing the strongest balance sheet ever with approximately $99 million cash on hand and in cash equivalents as of Aug. 8. The EV manufacturer also bore the brunt of the broad risk-aversion, as investors remained wary about a potential euro area recession and the Fed’s aggressive tightening policy path.

Mullen Automotive (MULN) stock has lost about 28% of its value over the past month, especially since announcing in late July that shareholders had approved increasing the total shares outstanding by more than sixfold. MULN stock is up about 0.3% in Monday's premarket at $0.7560 after losing 6.5% on Friday, August 19.

Also read: Tesla Stock Deep Dive: Price target at $400 on China headwinds, margin compression, lower deliveries

Mullen Automotive stock news

Mullen Automotive is stretching investors in two directions. On the one hand, increasing the total share count from 377 million at the end of the second quarter to 2.25 billion is highly dilutive and suggests the company will need to pursue a reverse stock split at some time in the near future since Nasdaq requires listed companies to keep their shares above $1. On the other hand, shareholders have known all along that Mullen's executive team was focused on funding the automotive startup via equity rather than debt. Headquartered in Brea, California, the company had less than $9 million in total debt at the end of June, and management said it wants to even cut that amount by 77%.

On top of the financing structure, Mullen has been producing a steady bevy of positive headlines all summer.

In mid-July, Mullen announced a binding contract with DelPack Logistics to deliver 600 Class 2 electric delivery vans. Delpack is an important delivery partner of Amazon (AMZN), and observers seemed impressed by the immediacy of the production timeline. Mullen said it will begin deliveries in August and deliver 300 units by the end of November 2022. The remainder will be handed over by January 2024. The delivery vans will each come equipped with an 80 kWh battery.

Mullen executives also said that the Mullen Five crossover SUV is well on its way to being executed. The company took 25,000 reservations for its first consumer model late last year and said deliveries are expected in Q2 2024. The vehicle is slated to come with 325 mph of range and go 0-60 mph in 3.2 seconds.

Mullen FIVE

Geode Capital Management bought nearly 2.6 million shares of MULN during the second quarter, which follows the lead of other major institutional investors. In fact, Mullen's 101 institutional investors increased their holdings from 4.2 million to 30.8 million just since mid-May. Geode has been adding shares for three straight quarters now, and both BlackRock and Vanguard have also been adding steadily to their piles.

Mullen Automotive stock forecast

Mullen stock broke below the $0.78 support level on Friday. That price held up on May 12, July 31 and August 1, but it is no match for the significant dilution ahead.. With the $0.78 support level's demise on August 19, expect MULN stock to drop to the February 24 low at $0.52.

The 9-day moving average is trending below the 21-day average, which demonstrates that the bias remains to the downside. The Accumulation/Distribution indicator shows a stock unlikely to rally any time soon.

Longer-term price targets for bulls will remain focused on the $1.13 and $1.40 resistance levels.

MULN daily stock chart

Previous updates

Update: Mullen Automotive (MULN) stock settled at $0.71 on Monday, down 6.14%. Wall Street had its worst day since mid-June as the focus shifted to a European recession and the US Federal Reserve's decision to fasten up the pace at which it shrinks its balance sheet. Russia spurred risk-aversion as it announced it would shut down the Nord Stream 1 pipeline for three days for maintenance. The news sent European indexes sharply down, eventually weighing Wall Street. The Dow Jones Industrial Average lost 1.91%, while the S&P 500 shed 2.13%. The Nasdaq Composite was the worst performer, down 323 points or 2.55%.