Rising rates, supply chain issues, and declining demand have marred the performance of many sectors. Some of the automotive participants, such as Mullen Automotive, Inc. (MULN), Faraday Future Intelligent Electric Inc. (FFIE), and specialty retailer Bed Bath & Beyond Inc. (BBBY), took major hits.
So, let’s unravel the complications surrounding these companies first and see what emerges.
Since the onset of the semiconductor shortage, automakers have faced slashed production schedules and reported staggering revenue losses. According to a report from Techwire Asia, the shortage of semiconductors has caused manufacturing lead times to increase from an average of three to four months to an average of 10-12 months.
Combined with skyrocketing interest rates, higher gas prices, broad inflation, and rising commodity prices, make vehicles more expensive, which could dampen new vehicle demand.
Moreover, retail sales dropped 0.4% in February as consumers steered spending away from discretionary items such as auto dealerships, furniture, home stores, and department stores.
On the other hand, BBBY’s stock price has been on a precipitous decline in recent months, weighing on its fundraising efforts. Marred by decreased demand for home décor in a slowing economy, the home goods seller is staving off bankruptcy by raising capital from selling its preferred stock and warrants.
Recently, CNBC reported that the company again warned of a bankruptcy filing if the proposed $300 million stock offering doesn’t pay off, as it fights to look for buyers and investors in recent months.
Given this bleak outlook, one thing is clear, while shares trade below single-digit price levels, the ‘wipeout risk’ remains high for MULN, FFIE, and BBBY in a capital-poor financial state.
Mullen Automotive, Inc. (MULN)
MULN is an Electric Vehicle (EV) company that operates in various verticals of businesses focused within the automotive industry. It is engaged in building passenger EVs and a portfolio of commercial vehicles. It currently has an average trading volume of 247.77 million.
On March 8, the company announced that Nasdaq had approved its request for a 180-day extension to meet the $1 minimum bid price requirement. Last year in September, MULN was notified that it failed to meet the minimum $1 bid price per share requirement as set forth in Nasdaq Listing Rule 5810(c)(3)(A)(ii).
Consequently, if the stock fails to trade above $1 for a minimum of 10 consecutive business days prior to September 5, 2023, the company will implement a reverse stock split to cure the deficiency prior to the expiration of the additional 180-day compliance period.
For the fiscal 2023 first quarter that ended December 31, 2022, MULN’s loss from operations widened 423.7% year-over-year to $73.62 million. The company’s attributable net loss came in at $376.28 million, widening 141.5% from the previous year’s quarter. In addition, its net loss per share amounted to $0.28 during the same period.
In addition, the stock’s trailing-12-month ROTC and ROTA of negative 144.39% and 217.65% compare to the industry averages of 6.35% and 4%, respectively.
The stock has plunged 70.4% over the past six months and 96.3% over the past year to close the last trading session at $0.11. Also, it is currently trading below its 50-day and 200-day moving averages of $0.24 and $0.48, respectively, indicating a downtrend.
It is no surprise that MULN has an overall rating of F, which translates to a Strong Sell in our POWR Ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
MULN has an F grade for Value and Stability and a D for Sentiment and Quality. It is ranked #57 among 72 stocks in the D-rated Auto & Vehicle Manufacturers industry.
Beyond what we’ve stated above, we’ve also rated MULN for Growth and Momentum. Get all MULN ratings here.
Faraday Future Intelligent Electric Inc. (FFIE)
FFIE is engaged in the design, development, manufacturing, engineering, sale, and distribution of electric vehicles in the United States and internationally. It currently has an average volume is 59.62 million.
On March 9, the company announced its plans to raise $50 million from institutional investors and a ‘potential’ additional raise from its stockholders to further strengthen its balance sheet and fund its production ramp-up. This could increase its overall debt burden.
In terms of forward EV/Sales, FFIE is trading at 2.06x, 83.2% higher than the industry average of 1.12x. Likewise, its forward Price/Sales multiple of 1.69 is 100.1% higher than the industry average of 0.85.
Also, the stock’s trailing-12-month ROCE, ROTC, and ROTA of negative 147.14%, 55.52%, and 108.19% compare to the industry averages of 11.79%, 6.35%, and 4%, respectively.
In the fiscal year that ended December 31, 2022, FFIE’s loss from operations came in at $450.99 million, widening 27.3% year-over-year. The company’s net loss widened 6.9% from the prior-year value to $552.07 million, while its net loss per share stood at $1.50 for the same period.
In addition, its total assets declined 43.8% year-over-year to $510.29 million, compared to $907.43 million for the fiscal year that ended December 31, 2021.
Analysts expect FFIE's loss per share for the fiscal years 2023 and 2024 to remain negative. Over the past year, the stock has declined 93.9% to close the last trading session at $0.30, below its 50-day and 200-day moving averages of $0.59 and $1.23, respectively.
FFIE's weak fundamentals are reflected in its POWR Ratings. The stock has an overall rating of F, which translates to a Strong Sell in our proprietary rating system. It has an F grade for Stability and a D for Value, Sentiment, and Quality. In the same industry, it is ranked #47.
Click here to see the additional ratings of FFIE (Growth and Momentum).
Bed Bath & Beyond Inc. (BBBY)
BBBY is an omnichannel retailer offering a range of domestic merchandise such as bed linens, bath items, kitchen textiles, home furnishing items, and various juvenile products. It sells its products through its website and under ten brands: Bee & Willow, Marmalade, Nestwell, Haven, Simply Essential, Our Table, Wild Sage, Squared Away, Studio 3B, and H for Happy. It has an average trading volume of 82.65 million.
In the fiscal third quarter that ended November 26, 2022, BBBY’s net sales decreased 32.9% year-over-year to $1.26 billion. Its gross profit declined 58.3% year-over-year to $278.86 million, while its operating loss widened 423.7% from the year-ago value to $450.93 million.
BBBY’s adjusted net loss and adjusted net loss per share came in at $331.23 million and $3.65, respectively, worsening significantly from the year-ago period. Also, its adjusted EBITDA loss came in at $224.99 million, compared to an adjusted EBITDA of $40.64 million in the same quarter the prior year.
The stock’s trailing-12-month gross profit margin of 26.14% is 25.3% lower than the industry average of 35%. Likewise, BBBY’s trailing-12-month net income margin, ROTC, and ROTA of negative 20.54%, 17.70%, and 28.99% compares to the industry averages of 4.56%, 6.35%, and 4%, respectively.
Analysts expect BBBY's EPS to be negative $1.77 for the fourth quarter that ended February 28, 2023. Its revenue is expected to decline 41.5% year-over-year to $1.20 billion in the to-be-reported quarter. Both revenue and EPS are expected to decrease to $4.83 billion and $5.81 in the fiscal year ending February 2024. Moreover, it missed the consensus revenue estimates in each of the trailing four quarters.
BBBY’s shares have declined 98.5% over the year to close the last trading session at $0.35. The stock is trading below its 50-day and 200-day moving averages of $1.73 and $4.77, respectively, indicating a downtrend.
BBBY's POWR Ratings reflect this bleak outlook. The stock has an overall rating of F, which equates to a Strong Sell in our proprietary rating system. It has an F grade for Stability and Sentiment and a D for Momentum and Quality. It is ranked last of 56 stocks in the Home Improvement & Goods industry. Click here to see other ratings of BBBY for Growth and Value.
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MULN shares were trading at $0.10 per share on Wednesday afternoon, down $0.00 (-4.56%). Year-to-date, MULN has declined -65.03%, versus a 6.99% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
What Do 2 Auto Stocks and a Specialty Retailer Have in Common? Extreme Volume and a Terrible Buy Rate StockNews.com
