Mullen Automotive Stock Forecast: After 59% pullback in five weeks, MULN bulls try to hold at $0.18

Mullen Automotive (MULN) stock once again finds itself back at $0.18. This is the third time besides November 30 and December 7 that bulls are clinging to the final support level keeping the battered automaker from making new all-time lows. MULN stock lost 4.3% on Thursday to end the session at $0.1813. 

Mullen Automotive stock news: Management gets extension on NASDAQ listing requirement

Mullen's management announced on Wedneday that the electric vehicle startup has been given a 180-day extension to meet the NASDAQ exchange's $1 share threshold. Mullen's last warning from NASDAQ expired on March 6. Now the penny stock has until September 5, 2023, in order to meet the exchange's criteria in that its share price must remain above $1 for 10 consecutive trading sessions. If MULN stock fails to meet this threshold, and to be sure it has not traded above $1 since late July of last year, then management will need to effect a reverse stock split. For example, investors would receive one share for every 10 or 20 shares currently held.

"Consistent with my message to our shareholders, we will use our best efforts to regain compliance to meet NASDAQ’s requirement for a $1 minimum bid price," said David Michery, CEO and chairman of Mullen. 

The likelihood of trading back above $1 without a reverse stock split is low. This is because the deterioration in the share price has largely been caused by management's consistent dilution. At the end of 2021, there were about 17.4 million shares of MULN in existence. By the end of 2022, this figure had grown to 1.36 billion. This means the share count multiplied 77 times in just 12 months. Yikes!

Mullen is an automotive startup without any consistent revenue stream and lots of development costs in terms of production, such as readying its factory to build its Mullen FIVE crossover model that is planned for commercial release in early 2025. This means it is burning through cash. In the quarter ending in December, Mullen lost $73.6 million from operations. At the end of the same quarter, it held a little over $68 million in cash. Without enough cash to get it through the present quarter, let alone to breakeven several years from now, rest assured that the dilution will remain a strong feature of this stock for some time. Because of that, the longer term bull case will always play second fiddle to the immediate need for dilution.

Mullen Automotive stock forecast

If MULN stock breaks below $0.18, then expect a deep sell-off. There is no certainty where the next support level sits however. The best guess from this author is the S1 support at $0.145. Otherwise, bulls will sit and wait for a break above $0.21. 

MULN daily chart