There’s a lot going on with California-headquartered electric vehicle (EV) manufacturer Mullen Automotive (NASDAQ:MULN), but it’s not all positive news. As we’ll discover, $1 is a crucial level for MULN stock, and investors have to consider that a delisting might happen in 2023. Mullen Automotive also has other problems that prospective shareholders need to consider before they go on a dip-buying expedition.

Don’t get the wrong idea here. There are some positive developments to report with Mullen Automotive. For instance, Mullen announced a team-up with Rapid Response Defense Systems to provide cargo vans for the U.S. government. Also, Mullen Automotive introduced two new commercial EVs at an event in Indiana known as Work Truck Week 2023.

So, it might seem like financial traders should be furiously buying Mullen Automotive shares. Yet, the sellers are firmly in control and Mullen’s investors shouldn’t count on a comeback happening anytime soon.

What’s Happening With MULN Stock?

It was only a year ago that MULN stock traded at $3, but it’s been below $1 since last summer and recently dropped to just 14 cents. The Securities and Exchange Commission (SEC) recently placed the stock on the Short Sale Restriction (SSR) list, presumably to help prevent “bear raids.”

That’s not the only issue for Mullen Automotive’s stakeholders to worry about. Mullen’s auditor/accounting firm recently announced its resignation, and Drawbridge Investments and DBI Lease Buyback Servicing have filed a legal complaint in a New York court against Mullen Automotive.

The Drawbridge/DBI lawsuit is rather complicated. Suffice it to say, though, that the complaint involves the delivery (or possibly, the lack thereof) of Series E preferred stock. In any case, Mullen Automotive could be mired in a costly legal battle for a while.

A Reverse Stock Split Is Likely for Mullen Automotive

Mullen Automotive has other issues, including its deteriorating bottom-line results. Alarmingly, Mullen’s net loss attributable to common shareholders during the first quarter of fiscal 2023 increased 142% year over year (YOY) to $376.9 million.

Yet, the problem that’s been top of mind lately among Mullen Automotive’s shareholders is the possibility of a delisting from the Nasdaq exchange. Reportedly, the Nasdaq exchange issued a noncompliance warning to the automaker. This occurred because MULN stock had closed below $1 for 30 consecutive business days.

However, the Nasdaq exchange has granted Mullen Automotive a 180-day extension. This gives Mullen more time to comply with the exchange’s minimum bid price rule. If the stock recently traded at 14 cents, though, then getting above $1 and staying there will be a tall order.

Chances are excellent, I’d say, that Mullen Automotive will end up enacting a reverse stock split at some point. This is a commonly used tactic among exchange-listed companies that are having this type of problem. It’s certainly not a permanent solution, though, and it won’t actually make MULN stock more valuable to the shareholders.

So, Should You Buy MULN Stock at a 52-Week Low?

You’ve probably heard the expression, “Buy low, sell high.” Also, there’s the old saying, “Buy when there’s blood in the streets.” There’s some truth to those principles, no doubt. Yet, investing in Mullen Automotive now could prove to be a costly mistake.

Sure, MULN stock may be trading near its 52-week low. That doesn’t make it a bargain, however, as the stock could get delisted this year. Moreover, even if Mullen Automotive enacts a reverse share split, this won’t solve the company’s legal and financial problems.

So, don’t feel compelled to apply a buy-the-dip strategy now. Mullen Automotive has too many problems for financial traders to take a share position with confidence 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.