Mullen Automotive stock price crashed to a record low, erasing millions of dollars in value, and making it one of the worst-performing companies in the United States. MULN has become a penny stock trading at $0.4560, giving it a market cap of just $4.5 million.
Can MULN be salvaged?
Mullen Automotive’s stock has crashed because of its slow growth rate and the lack of money in its balance sheet.
The most recent financial results showed that Mullen recorded a net loss of $235 million in the first six months of the year. This was a big improvement from the $495 million the company lost in the same period a year earlier.
A company can continue as a going concern when losing these huge sums of money only if it has a solid balance sheet. For example, Tesla recorded huge losses before it turned profitable a few years ago. Other EV companies like Rivian, Nio, and Lucid Group are still losing substantial sums of money.
Mullen Automotive’s key challenge is that it has no money on its balance sheet. The last six month results showed that its cash and equivalents dropped from over $155 million to about $22.3 million. Its restricted cash rose to $7.4 million from $429 million in the same period.
As such, these funds are not enough for a company that lost over $970 million in the last financial year.
Mullen has announced that it has secured some financing to help boost its balance sheet. It has also applied for a $55 million Department of Energy (DoE) loan for its battery materials processing business.
In June last year, the company announced that it had received $250 million in committed capital from a group of investors. In addition, the company has received some big orders from American and global customers. For example, it received a $210 million order from Volt Mobility, a company from the United Arab Emirates. Over time, that order will see it deliver over 3000 vehicles.
The company also increased its six-month revenue guidance to $75 million and announced plans to reduce monthly expenses from $12.8 million to $7.3 million, which it achieved by laying off about 20 percent of its workers.
Still, like Canoo, there is a likelihood that the company may go bankrupt this year as its financing options remain muted.
Mullen Automotive stock price analysis
MULN stock chart by TradingView
The daily chart shows that the MULN share price has gone nowhere since September last year. It has moved in a horizontal direction as demand from investors dwindled. As a result, the stock has remained below the 50-day moving average, while the Average True Range (ATR) has also crashed, a sign that the stock is no longer volatile.
Therefore, there are two potential scenarios. The first and most likely one is where the stock crashes as the company files for bankruptcy. The other scenario is where the ongoing consolidation turns to be an accumulation, which will push the stock substantially higher later this year. Such a rebound may happen when the company publishes its next financial results.
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