The Mullen Automotive stock price has been in the spotlight this week after Hindenburg report criticized the upcoming electric vehicle (EV) company. The stock is trading at $2.44, which is about 45% below its highest level on March 22. It is also 88% below its all-time high, bringing its total market cap to more than $500 million.
The EV industry has been in a fast-growth period in the past few years. Inspired by Tesla, the number of companies building EVs has been growing. In all this time, the process has been simple. An inspiring founder, mostly from an automotive industry, launches a company and creates a slick website.
They then launch a demo vehicle and debuts it in one of the leading auto shows. The next step is where they raise capital and start taking pre-orders. As the process goes on, they announce a partnership with a large company and possibly go public. In some instances, the preordered vehicles don’t see the end of the day. This has been a model used by companies like Lucid, Rivian, Canoo, and even Mullen Automotive. Lucid and Rivian have managed to deliver their vehicles.
The Mullen stock price tumbled this week after Hindenburg Research accused the company of being an EV hustle. The report accused Mullen Automotive of misrepresenting test results of its battery technology. It also accused the firm of having numerous production hurdles such as the lack of an EPS certificate for its vehicles. It also accused the firm’s $60 million of orders as coming from a small cannabis company that has one location.
Hindenberg also accused Mullen Automotive’s top holder Terren Peizer of backing several companies that have gone parabolic and then dropped sharply. So, what next for the Mullen Automotive stock price? After reading the report, I believe that the company’s future is uncertain even though the management has rejected the claims. Like Rivian, I also expect the firm to continue facing substantial margin contraction as commodity prices soar.
The daily chart shows that the MULN stock price has been in a recovery phase as it dropped to an all-time low of $0.53 on February 25th. The shares rebound was mostly because of the product updates it delivered to investors. Recently, however, the shares have lost momentum following the Hindenburg report.
It is hovering at the same point as the 25-day and 50-day moving averages while the Smart Money Index (SMI) has been dropping. Its volume has also remained at elevated levels. Therefore, the outlook for the stock is bearish at this point, with the next key level to watch being at $1.5. Still, this being a penny stock means that the stock could also go parabolic as bulls pump it.
This post was last modified on Apr 07, 2022, 18:59 BST 18:59