Mullen (NASDAQ:MULN) has joined the Russell 2000 and 3000 Indexes. It’s a big day for the electric car manufacturer as they join these indexes which will give them access to institutional capital. In the run-up to this event, shares gained handsomely. But now, the price momentum for MULN stock is negative.
It is not surprising. In the middle of the month, Ian Bezek wrote an insightful piece regarding where he told retail investors to earmark the date and make sure to close out their positions after the event occurs.
In addition, inflation is a major concern for investors as it can lead to long-term economic growth that would be detrimental to the economy. The Fed has been implementing a gradual series of interest rate hikes in order to try and stave off inflation concerns.
The S&P 500 is taking a spill lately. This index follows the 500 largest public companies in the United States and provides a good overview of the market. Significantly, it is worth noting that growth stocks are also not doing well.
The company needs to have a solid foundation to power through the tough times. It doesn’t have the funds in its coffers to complete the commercialization of its lineup. Therefore, the time is ripe to sell your positions and wait for some solid news from the company.
What Does 2022 Hold for MULN Stock?
Mullen Automotive is telling investors an exciting story about its plans for electric vehicles and the potential for a breakthrough in battery technology.
Mullen is based out of a facility outside of Tunica, Mississippi, where it will make its cars. They are most well-known for their Five models that start at $55,000 before incentives and are in high demand. Five’s specs include an estimated 325 miles of range while Mullen develops the Persona, providing CCD cameras. They can protect your vehicle, unlock it via facial recognition, and even offer a remote app to keep tabs on location or family members.
Meanwhile, Mullen is also advancing battery technology for driverless cars. It has developed solid-state batteries that produce four times more energy than those currently used in electric vehicles. In February, it was progressing toward a pack with a 600-mile range.
The company is focusing its resources on shipping more of its new second-generation Five to help accommodate demand. At the same time, they await the completion of the retrofitting process in another facility, and other Five’s already produced. The company’s goal is to eventually have a huge suite and an impressive fleet of cargo vans. This would also mean they would get their highly-anticipated DragonFLY luxury sports car.
However, the issue for the company is where it will get the cash to continue with the commercialization of its platform. For Q2 ’22, Mullen expects to have over $65M in cash on hand. That is not a huge amount of money, and the only way the company can drum up funds is through equity issuances. However, the window of opportunity is closing because MULN’s stock price is in freefall, making the issue of equity unlikely.
Let Prices Cool Down Before Buying In
The stock market is in a volatile state. The volatility is caused by the uncertainty of the future of the economy.
Many factors can cause a change in the stock market. These factors include political changes, natural disasters, and even companies going out of business. This is why it is important to keep an eye on what’s happening globally and how it will affect your investments.
A combination of interest rate hikes, inflation, and Russia’s invasion of Ukraine is hurting investor sentiment. The economic recovery in the United States has been slower than many predicted. And the recent hike in oil prices could put even more pressure on global growth.
As a result of the market downturn, no one wants to overpay for stocks. MULN stock, although trading at relatively reasonable multiples, is still risky in the current environment.
On the publication date, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.