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The MULN stock price recently hit an all-time low as many small and emerging EV startups continue to struggle. Mullen Automotive’s share price plummeted to $0.20, representing a 98% decline from its peak and a drop of over 99% this year. This downward trend is mirrored in other EV stocks like Faraday Future, Arrival, and Hyzon Motors.
Mullen’s share price sank to this record low last week following its acquisition of Electric Last Mile Solutions for approximately $105 million after the company filed for bankruptcy. Additionally, Mullen acquired Bollinger, an EV company specializing in buses, for $148 million.
With Mullen’s market cap now at $339 million, it appears that these acquisitions have not yet yielded positive results. The company’s biggest challenge is the expected increase in cash burn over the coming years. Mullen ended the last quarter with $61 million in cash and short-term investments, but its cash burn rate is about $18.3 million per quarter.
Investors should brace for further dilution as the company progresses to the vehicle production phase. Mullen has already filed with the SEC for a vote to increase the number of common stock from 1.75 billion to 5 billion and is considering a reverse stock split. Furthermore, the company has proposed issuing $150 million in convertible notes and up to $190 million in convertible preferred stock.
Given these factors, it is likely that the MULN stock price will continue to face significant pressure in the coming months as investors grow concerned about further dilution. Mullen is attempting to compete with well-established and well-capitalized companies in the industry. For example, Rivian, which has over $13.2 billion in cash and thousands of customer orders, presents a formidable challenge. There is a strong possibility that Mullen could face bankruptcy in 2023 or 2024.
The daily chart indicates that Mullen Automotive’s share price has been in a consistent downward trend in recent weeks. It has dropped below the key support level of $0.2115, which was the lowest point on October 18, and is now trading below all moving averages. The MACD indicator has also continued to decline.
As a result, the shares are likely to keep falling, with sellers targeting the next support level at $0.1650. However, if the stock rises above the resistance point at $0.30, it could invalidate the bearish outlook.