Without a doubt, it’s part of the management’s job at electric vehicle manufacturer Mullen Automotive (NASDAQ:MULN) to promote the company to investors. Yet, this doesn’t mean you have to buy what they’re selling. MULN stock is, I believe, bound for lower prices despite the management’s attempts to put a positive spin on a hopeless situation.

I’ve tried to warn you about Mullen Automotive before. It’s a startup business that’s trying to win in a highly competitive EV manufacturing field. In a time of tight lending conditions, financially unsound businesses can’t continue to survive on hype and hope.

Still, we can at least hear what Mullen Automotive’s management had to say in a recent press release. Just don’t get your hopes up too much, as we’ll look under the hood and find that Mullen Automotive still has major problems.

More Reverse MULN Stock Splits Are Likely

As you may recall, the Nasdaq exchange previously warned Mullen Automotive that it was out of compliance with the exchange’s listing requirements. Specifically, MULN stock fell below the $1 minimum bid price threshold.

Then, Mullen Automotive turned to the old playbook of distressed publicly listed businesses, and enacted a reverse stock split.

This artificially inflated the Mullen share price above $1, and the company was back in compliance with the Nasdaq exchange’s listing requirements.

Fast-forward to June 2023, and MULN stock has fallen far below $1. Because of its low share price, the stock could (again) be in jeopardy of delisting from the Nasdaq exchange. For a similar reason, Mullen Automotive might also get booted off of the Russell 2000 Index.

Mullen Automotive tried jumping on the machine-learning bandwagon, announcing that its vehicles will have artificial intelligence powered technology. This didn’t give the Mullen share price an appreciable boost, so clearly, the market wasn’t impressed with the company’s sudden foray into AI tech.

Don’t be surprised, therefore, if Mullen Automotive resorts to another reverse stock split to avert delisting threats.

Mullen’s Management Gives an Sales Pitch

Again, we should expect the management at Mullen Automotive to put a positive spin on the company’s financial situation. However, Mullen’s recent press release blurs the line between a spin job and outright mental gymnastics.

Mullen Automotive declared, “The Company continues to trade at a steep discount to its current cash position of $135 million or $0.38 per share as of June 13, 2023.” That’s an odd way to value a company. What is Mullen Automotive’s management trying to suggest? Are they claiming that MULN stock will or should go to 38 cents based on the company’s cash position?

Then, Mullen Automotive doubled down on this line of reasoning. The press release stated, “As per the Company’s last reported financial position on March 31, 2023, it had $86.7 million of cash available for operations and $0.68 of cash value per share.”

Here’s what I’m taking away from that. Alarmingly, Mullen Automotive’s cash value per share dropped from 68 cents on March 31 to just 38 cents on June 13. That’s not encouraging, is it? And, since Mullen insists on invoking a stat from March 31, let’s see what else the company revealed from that time.

Mullen Automotive’s Form 10-Q from the period ended March 31 has some real gems. Here’s one: “The Company has not generated revenue to date and has accumulated losses since inception.” Also, Mullen cited multiple factors that “raise substantial doubt as to the Company’s ability to continue as a going concern.”

I could also cite Mullen’s total operating expense and loss from operations, both of which more than doubled year over year. I’m not fully on board with using cash position per share to value a business. I prefer to use a company’s trailing price-to-earnings ratio, but regrettably, Mullen Automotive has none.

MULN Stock Will Probably Head Lower

Mullen Automotive has already resorted to a reverse share split. Plus, the company issued a seemingly mandatory AI-focused press release. Yet, here we are and Mullen Automotive’s investors still have a lot of catching up to do.

It’s fine to hear what Mullen Automotive’s management has to say. At the end of the day, however, you have to make your own investment decisions.

Personally, I’m not swayed by Mullen Automotive’s optimistic spin on the company’s dire financial situation. Ultimately, I expect MULN stock to continue on its downward path and wouldn’t recommend owning it in 2023.

On the date of publication, David Moadel 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.