Mullen Automotive (MULN) stock largely flat after Monday's 9% spike

Mullen Automotive (MULN) stock is largely flat at $0.9045 in Tuesday's premarket a day after shares soared 9%. MULN is up close to 14% in the past week after releasing earnings results for the quarter ending in June.

Mullen Automotive stock news

Mullen's earnings release on August 12 for the quarter ending in June helped propel the company's share price forward. The market liked what it heard when management said it was considering reducing total debt by 77%. Of course, that would likely come at the expense of existing shareholders through equity dilution. Mullen has total debt of $8.9 million, and its current debt is $3.6 million. Management said it had $99 million in cash during the first week of August.

The pre-revenue company had a loss of operations of $18.2 million in the quarter and a net loss of $59.5 million. This is to be expected as Mullen ramps up its EV and battery business. In just one year the company has gone from a little over 5 million shares outstanding to more than 376 million, which can be seen in the statement below.

In early August, Mullen announced the opening of its fifth R&D office, this one in Detroit. That team will focus on developing EV technology for vans.

"Detroit is a natural spot for us for all the right and obvious reasons. A majority of our current partners are based in Detroit, so opening this center made perfect sense for our ongoing and future commercial van development," said CEO and chairman David Michery.

Mullen's quarterly financial statement focused extensively on how it plans to fund itself, and it was not playing coy about continued share dilution.

As an early-stage development company, our ability to access capital is critical. Our management plans to continue to raise additional capital through a combination of equity and debt financings, strategic alliances, and licensing arrangements. The company management has evaluated whether there are any conditions and events, considered in aggregate, which raise substantial doubt about its ability to continue as a going concern over the next twelve months from the date of filing this report. Since inception, we have incurred significant accumulated losses of approximately $278.9 million, and management expects to continue to incur operating losses over the near future.

MULN shareholders approved the issue of $275 million in Series D preferred stock and warrants in late July. The statement reads:

The projected capital raise is expected to provide sufficient liquidity and capital resources for 2023. On August 5, 2022, the Company filed a S-3 Registration Statement for selling stockholders. The Company will receive approximately $43 million in cash in exchange for Series C Preferred Stock and associated warrants for the remainder of 2022.

Mullen Automotive stock forecast

With all that share dilution on the horizon, it is impressive that MULN stock is holding up so well. Currently, Mullen stock is above the 9-day moving average and trading right in line with the 21-day average.

Near-term support is at $0.78. Bulls will focus their energy at the $1.13 and $1.40 resistance levels.

MULN daily stock chart