Mullen Automotive stock price forecast: buy the MULN drop?

Mullen Automotive’s share price was in the spotlight this week after the Hindenburg report criticized the future electric vehicle (EV) company. The stock is trading at $2.44, about 45% below its March 22 high. It is also 88% below its all-time high, bringing its total market capitalization to over $500 million.

Is Mullen just a scam?

The electric vehicle industry has experienced a period of rapid growth in recent years. Inspired by Tesla, the number of companies building electric vehicles has grown. All the while, the process has been simple. Inspirational founder, mostly from the automotive industry, launches a business and builds a sleek website.

They then launch a demonstration vehicle and debut it at one of the major auto shows. The next step is where they raise capital and start taking pre-orders. As the process progresses, they announce a partnership with a major company and eventually go public. In some cases, pre-ordered 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 managed to deliver their vehicles.

Mullen’s share price fell this week after Hindenburg Research accused the company of being a stampede for electric vehicles. The report accuses Mullen Automotive of misrepresenting test results of its battery technology. He also accused the company of having many production hurdles such as no EPS certificate for its vehicles. He also accused the company’s $60 million orders of coming from a small cannabis company that has only one location.

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Hindenberg also accused Mullen Automotive’s main holder, Terren Peizer, of backing several companies that went parabolic and then fell sharply. So, what next for Mullen Automotive stock price? After reading the report, I believe the future of the company is uncertain even though management has denied the claims. Like Rivian, I also expect the company to continue to face substantial margin contraction as commodity prices soar.

Mullen Automotive Stock Price Forecast

The daily chart shows that MULN stock price is in a recovery phase as it fell to an all-time low of $0.53 on February 25. The rebound in stocks was mainly due to product updates provided to investors. Recently, however, stocks have lost momentum following the Hindenburg report.

It is hovering at the same point as the 25- and 50-day moving averages, while the Smart Money Index (SMI) is falling. Its volume also remained at high levels. Therefore, the outlook for the stock is bearish at this point, with the next key level to watch being at $1.5. Yet the fact that it is a penny stock means that the stock could also go parabolic when the bulls pump it.

Karen J. Nelson