Despite its small size, Mullen Automotive (NASDAQ:MULN) has arguably become as widely followed as the larger, more high-profile EV stocks. However, this popularity notwithstanding, MULN stock differs greatly from these other names, and not just in terms of market capitalization.

Although I lean bearish on the most popular EV stocks, like Lucid Group (NASDAQ:LCID), Rivian Automotive (NASDAQ:RIVN) and Tesla (NASDAQ:TSLA), I’ll admit that the bull case for each of them can be argued just as strongly as the bear case.

Unfortunately, the same cannot be said about Mullen. Unless the meme stocks phenomenon returns, it is unlikely that shares in this EV contender will make a stunning comeback.

Most likely, Mullen will remain a cheap stock that continues to become cheaper over time as its fundamentals keep getting worse. Let’s dive in, and see just why this stock is not a good buy.

The Plethora of Problems with MULN Stock

Risks, concerns, red flags. Whatever you want to call them, they are par for the course when it comes to penny stocks. Yet Mullen Automotive doesn’t just have a handful of these factors that make it a questionable investment opportunity. Rather, it has more of them you can shake a stick at.

In my last article on MULN stock, I discussed several of them. Major issues that put this stock in the “do not buy” category include heavy use of dilutive financing methods, the fact that Mullen auditors have issued a “going concern warning” about the company, and a lack of deep-pocketed strategic partners.

That’s not all. Alongside these big concerns, InvestorPlace contributor Larry Ramer recently pointed out several more about Mullen. These include the company’s history of hyping up relatively small developments as well as past questionable claims about its battery technology (first brought to light in a short report issued by Hindenburg Research last April).

This plethora of problems explains full well why shares have plunged 90% over the past 12 months. Yet while the stock has become substantially cheaper, don’t assume that it’s a low-downside, high-upside situation. In fact, it’s quite the opposite.

Another Massive Decline Remains Likely

Trading for just 34.5 cents per share, I can understand why some speculators continue to find MULN stock appealing. Stocks that trade at sub-$1 per share prices have a tendency to make outsized moves. All it may take for the next such one to happen is for another meme wave to emerge.

However, meme madness is nowhere near as powerful as it was in 2021 and early 2022. I’m doubtful that another trip to the moon is in the cards for Mullen. Sure, shares could still in theory zoom higher on improved fundamentals, but I don’t see that happening either. Why? Mainly, because the issues that sent MULN to the market junkyard in the first place still persist.

With shareholders approving management’s proposal to increase the authorized share count, the company is likely gearing up for additional dilutive capital raises.

As the share count grows while the underlying value of the company continues to plummet, the market is likely to give MULN shares a further de-rating.

My Verdict on MULN

Sure, Mullen’s days as a penny stock may be numbered. As InvestorPlace Assistant Financial News Writer Eddie Pan reported Jan. 25, along with receiving approval to increase the share count, shareholders have approved management’s proposal to reverse-split the stock.

But while reverse-splitting MULN will bring some benefits, such as enabling the stock to continue trading on the Nasdaq exchange, remember that a reverse split does not change anything about a company’s underlying fundamentals. Mullen also has said it has no intent to enact a reverse stock split at this time.

Investors looking to cash in on the EV megatrend have numerous options to do so, and not only just TSLA stock.

Put simply, stick to these more promising EV plays, and avoid risking your hard-earned capital (and wasting your time) with MULN stock.

On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.

Read More: Penny Stocks — How to Profit Without Getting Scammed

On the date of publication, Thomas Niel did not hold (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.