MULN stock price has been in a strong downward trend as concerns about the company remains. Mullen Automotive shares slipped to a low of $0.2804, the lowest level since October 19. It has plunged by more than 98% from its highest point in 2021. This price action is in line with that of other SPAC EV companies like Canoo, Faraday Future, and Lordstown Motors.
Mullen Automotive is a troubled EV company that has seen its short interest remain elevated. About 18% of its shares are held by short-sellers who hope to benefit as its stock crashes. At the sam time, the company has continued diluting its shareholders as the total outstanding shares soared to more than 0.377 billion.
The company has used its share sale proceeds to buy other EV companies. It recently bought Electric Last Mile manufacturing and assets. The firm also bought Bollinger Motors in September. Before that, the company unveiled several other acquisitions.
In my view, I believe that growth by acquisition is usually not a good strategy. For one, buying more companies tend to lead to a culture crash, which is hard to overcome. A good example of this is Salesforce, which has underperformed other tech stocks because of its aggressive acquisition strategy. Worse, Mullen has bought some companies with a troubled past.
Another concern for Mullen is that it will likely continue diluting existing shareholders as it plans to ramp up production in the next few years. On the positive side, the company has eliminated $13 million of debt and has $10 million of debt remaining. This means that the company can avoid dilution by using debt.
The daily chart shows that the MULN share price has been in a strong bearish trend in the past few months. It is now just a few points above its lowest level this year. The shares have moved below all moving averages. At the same time, the Relative Strength Index (RSI) has moved below 50. The sell-off is also being supported by the Supertrend indicator.
Therefore, the MULN stock price will likely continue falling as sellers target the next key support level at $0.15. However, short-sellers should be aware of the risks involved in shorting a meme stock. A short squeeze is highly likely.
This post was last modified on Nov 07, 2022, 05:09 GMT 05:09