After continuing on their extended slide for much of April, Mullen Automotive (NASDAQ:MULN) stock has found some support in recent days.

That’s not surprising, given there has been a spate of news/press releases regarding the electric vehicle maker that some regard as bullish for MULN stock.

Unfortunately, when you dive into the details of these latest developments, it’s clear that they do not change the story one iota. The bear case still stands, which is very bad news for anyone deciding to buy this stock today, even at current rock-bottom prices.

Mullen may trade for just under a dime, but that doesn’t mean this is a high-upside/low-downside opportunity. In fact, MULN is quite the opposite. Shares have a slim chance of advancing higher, and a strong chance of hitting even lower price levels. Here’s why.

MULN Stock and Recent ‘Small Potatoes’ News

Mullen Automotive continues to issue many press releases touting positive news related to the EV maker and/or its shares. These press releases can often help to gin up some bullishness for the stock. That appears to be the case, with these latest two press releases (both issued on April 28).

First, as InvestorPlace’s Shrey Dua reported that same day, Mullen provided investors an update on its Energy Management Modules contract with the Washington, D.C. local government.

Second, management announced that it is working with Shareholder Intelligence Services to investigate possible market manipulation and/or illegal short selling with MULN stock.

Yet while these announcements are encouraging some speculators to dive back in, that doesn’t mean you should join in as well.

Much like prior “game changing” announcements, the latest resurgence of bullishness will not last; these are “small potatoes” developments at best.

Although Mullen’s EMM contract may sound promising, the total value of its contract with the D.C. government is just $680,000, so it’s hardly a needle-mover.

The company can investigate short-selling all it wants, but that’s not why the stock has dropped by more than 99% over the past two years.

The Bear Case Still Stands

Just prior to the aforementioned press releases, I laid out the bear case for MULN stock. In a nutshell, further massive downside remains, primarily because of the prospects of continued heavy shareholder dilution.

Mullen has a long history of diluting investors through the issuance/sale of additional MULN shares. Per Seeking Alpha, since 2021, when the stock first became popular among retail investors, the outstanding share count has spiked more than 74-fold, from 23.4 million to 1.74 billion.

Mullen has made little progress using this cash to turn its early-stage EV businesses into a profitable enterprise. This combination, not alleged market manipulation, has been the reason behind MULN’s drop from over $10 per share to less than a dime per share.

But while considerable damage has been done, it’s far from over. Dilution will continue as the company gears up to convert previously issued preferred shares into up to 2.115 billion additional shares of common stock.

Besides limiting upside potential for existing shareholders, this flood of additional shares in the public market will place ample pressure. This may just well push MULN below a nickel. Perhaps, even towards a penny per share.

Bottom Line

At first, you may be skeptical that MULN is at risk of falling from 8 cents down to a penny per share, or by another 87.5%.

However, along with dilution, disappointment is likely to continue. There’s little to suggest that this cash-burner is on the verge of making the leap to consistent profitability. The EV upstart likely needs to raise even more money before it achieves this.

This creates a lose/lose situation for existing shareholders. If Mullen raises the money (from selling even more shares), the resultant dilution will put further pressure on the stock.

If Mullen doesn’t raise this money, the company could quickly find itself en route to bankruptcy, resulting in a total wipeout for investors.

Weighing these risks against its “small potatoes” positives, “sell/avoid” is the only rational decision to make with MULN stock.

MULN stock earns a D rating in Portfolio Grader.

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.