After suffering from staggering losses, investors of electric vehicle manufacturer Mullen Automotive (NASDAQ:MULN) should catch a break eventually – right? Don’t make any assumptions, as MULN stock could easily continue to lose value in 2023.

This is likely to happen despite Mullen Automotive’s attempt to reassure its shareholders.

We’ve done our best to try to warn prospective investors about Mullen Automotive before. The story hasn’t changed, and we’re still bearish today.

The idea here isn’t to malign Mullen Automotive, but only to steer dip-buyers and bottom-fishers away from a falling-knife stock with little to no hope of recovery.

Reverse Splits, Delistings and MULN Stock

As we discuss Mullen Automotive, we’re not just talking about one delisting here. MULN stock could actually get delisted from two separate indexes, believe it or not.

The Nasdaq exchange sometimes delists stocks if their closing bid prices stay below $1 for too long. The Nasdaq exchange warned Mullen Automotive about this, but the company avoided delisting by enacting a reverse stock split to artificially inflate the share price above $1.

That old trick fixed the problem temporarily. However, it didn’t take long for MULN stock to fall below $1 again. Recently, it traded at around 23 cents, which isn’t even close to $1.

Chris MacDonald made a great point, which is that Mullen Automotive also faces potential delisting from the Russell 2000 Index because of its low share price and depressed valuation.

Continued listing on the Russell 2000, he continued, “requires a closing price of at least $1 on the rank day, or an average daily closing price over the past 30 days of $1 or greater.” 

Again, MULN stock was recently far below the key $1 level. Shockingly, Mullen Automotive faces delisting from both the Nasdaq and the Russell 2000. Don’t be surprised, therefore, if the company resorts to one or more reverse stock splits in the future.

Mullen Automotive Tries to Quell Its Shareholders

Without a doubt, many of Mullen Automotive’s long-term investors are in a state of distress over their financial losses. We’re not just making this up; Mullen Automotive actually issued a letter to its shareholders acknowledging the “many emails and calls regarding the decrease in our share price.”

In that letter, Mullen Automotive touted its “current cash position of $135 million or $.038 per share.” Before you drop the drink in your hand, rest assured that Mullen quickly released a correction, stating that its cash position is “$0.38 per share,” not “$.038 per share.”

But then, perhaps you shouldn’t rest assured. Let’s not focus on the per-share figure, but on the dollar amount. Frankly, $135 million isn’t much of a cash position for Mullen Automotive to have.

Let’s do some easy math here. In the six months ended March 31, 2022, Mullen Automotive incurred $44.51 million worth of operating expenses.

Then, in the six months ended March 31, 2022, Mullen’s operating expenses ballooned to $141.51 million. That figure, of course, exceeds the announced $135 million cash position that Mullen Automotive’s management presumably thought would quell the shareholders’ concerns.

The Bear Case for MULN Stock Is Undeniable

Mullen Automotive’s vehicles are probably eye-catching, efficient and powerful. Yet, that won’t matter much if Mullen Automotive fails as a business due to its problematic financial position.

Besides, Mullen Automotive could face delisting from two separate indexes. Sure, Mullen Automotive can resort to the tried-and-true tactic of enacting more reverse stock splits.

Those are only temporary fixes, though. Artificially inflating Mullen Automotive’s share price won’t solve the company’s financial issues.

Plus, it won’t prevent Mullen’s investors from experiencing ongoing losses. Therefore, finally, MULN stock gets an “F” rating and is a no-go in 2023.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.