The company published weak financial results this week.
The stock has gotten oversold, meaning it could have a short-squeeze.
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Mullen Automotive (NASDAQ: MULN) stock price has crashed to an all-time low as concerns about the company continued. MULN shares plunged to a low of $1.22 and has dropped in the past four straight months. It has dropped by almost 100% from its all-time high, giving it a market cap of $189 million.
Mullen Automotive has made several headlines in the past few days. The biggest news was that the company published its financial results on Monday. In a statement, the firm said that its cash used in operations was about $67.7 million. As a result, the company’s net loss came at $495.4 million in the six months to March 31st.
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Mullen Automotive ended the quarter with $86.3 million in cash and investment. It had about $116.1 million in cash by April 30 and $45 million in committed capital. The concern for Mullen is that these funds are not enough as it moves to production.
Recent results by companies like Lucid Motors and Rivian Motors have showed that electric vehiclecompanies spend a lot of cash when building their products. While the two companies have started manufacturing and delivering vehicles, they have continued losing billions of dollars.
The other important Mullen Automotive news was another big order. The company received an order of 250 commercial class 3 chassis EV trucks valued at over $15.5 million. In a statement, the firm said that it will begin delivering them in August this year. The order will be delivered through Randy Marion Automotive Group.
While these orders are important and encouraging, I believe that the company will need to raise cash in the next few months. If this happens, the company will either sell shares or raise capital in debt.
The daily chart shows that the Mullen Automotive share price has been in a strong bearish trend in the past few months. The sell-off intensified after the stock moved below the key support level at $4.45, the lowest level in November last year.
Mullen Automotive has crashed below all moving averages. The Relative Strength Index (RSI) and the Stochastic Oscillator have moved below the oversold level. Therefore, while the outlook of the stock is bearish, there is a possibility that the shares will have a short squeeze.
If this happens, the next key level to watch will be at $2, which is the 25-day moving average level. In the long term, the stock will likely continue falling and move below $1.
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