Mullen Automotive (NASDAQ:MULN) stock has come back into the spotlight over the past month. Due to several developments throughout August, shares in the electric vehicle (EV) maker briefly experienced renewed enthusiasm.

However, I wouldn’t view any of these developments as a signal to buy. Recent progress notwithstanding, the big concerns/red flags with this stock continue to outweigh these small positives.

Lacking the war chest of other EV startups, it needs to raise more money. This will come at the expense of existing shareholders. The company also still has a lot to prove when it comes to moving out of the concept stage. This holds true for both its EVs and its solid state EV battery technology.

Put simply, it’s debatable whether there is tremendous upside with this risky stock. With this in mind, skipping on it appears to be the best move.

A Closer Look at MULN Stock

Over the past month, Mullen Automotive has disseminated several company-related developments. These include the release of preliminary results and its announced plans to have a demo of its FIVE EV crossover ready by October.

Another development, as reported Aug. 25 by InvestorPlace’s William White, was news of MULN forming a partnership with Team Rosberg Engineering. Team Rosberg is a well-established specialist in chassis engineering.

Again, these positives have helped to spark brief bouts of bullishness for MULN stock. Shares have initially moved higher on these news items, only to continue sliding to lower prices. Since Aug. 1, the stock (already down more than 90% from its all-time high) has pulled back from nearly $1 per share, to around 60 cents per share.

While it may be making steps in the right direction, they are only small steps. This fledgling upstart still needs to prove that it’s a promising contender.

More importantly, the small bits of good news throughout the month do little to outweigh its longstanding negatives and red flags. These unresolved issues continue to make this particular electric vehicle stock unappealing.

Dilution and Execution Risks

Key issues that made MULN stock a questionable opportunity earlier this year continue to be in play. First, the company’s poor capitalization, and the related dilution risk. Currently, the company has around $99 million in cash on hand.

This may sound like a high number compared to Mullen’s current market cap ($339.7 million), but it’s not enough to cover cash burn in the coming quarters, much less finance its move from the planning to the production stage. To get to subsequent stages, it will need to raise more capital, likely via the sale of convertible debt.

Mullen has leaned heavily on convertible debt for financing in the past. Over time, as these notes have been converted into equity, the company’s share count has ballooned. In just the past few quarters, it went from having 23.9 million to 498.7 million outstanding shares. Further dilution will split the pie further and will limit potential upside.

Second, there are execution-related risks. There’s the risk that accusations made by vocal short-seller Hindenburg Research about its battery technology could prove true. With its smaller amount of working capital, it may face more hiccups building out its infrastructure compared to deeper-pocketed rival upstarts.

The Verdict

MULN stock earns a D rating in my Portfolio Grader. Given its popularity with retail traders this year among the smaller EV stocks it may rank high in terms of familiarity. It doesn’t, however, rank highly in terms of its appeal as an investment opportunity.

To move from making small steps to big steps in terms of getting out of the pre-revenue stage, Mullen needs to raise substantially more money than it currently has in its coffers. This means more dilution, which will put more pressure on shares. There’s also the risk it fails to make a breakthrough with its solid state battery efforts.

You have many choices when it comes to adding EV exposure to your portfolio. As many of these names are of higher quality and offer a more favorable risk/return proposition, it’s best to stick with these choices and avoid MULN stock.

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.