Mullen Automotive (NASDAQ:MULN) has been one of the most popular small-cap stocks of late. MULN stock is up 270% in the past one month. However, its ascent has a lot to do with retail traders looking to fuel a short squeeze. It could be an interesting short selling opportunity, but risk-averse investors are likely to steer clear of the stock.
Mullen Automotive was listed on the Nasdaq in November 2021 via a reverse merger with Net Element, a fintech company. Since listing on the stock exchange, its stock has ebbed and flowed, but caught fire in the past couple of months. At the time of writing, it is among the top three most shorted stocks. With 45% of its float shorted, it creates an enticing short investment opportunity.
It would be worth opening up a position in MULN stock for short-term gains. The conditions appear ripe for a short squeeze as its trading volume and short ratio remain high. However, it is important to know that it won’t last for long.
Mullen Automotive has been on a great run at the stock market due to several interesting developments. Firstly, its flagship electric vehicle (EV), the Mullen FIVE, was featured on CarBuzz. The article covering the Mullen FIVE also included interviews from its chief executive officer and chairman and included key information about the vehicle.
The FIVE is a luxury EV which plans to go into production in late 2023. It is a bit too early to comment on its long-term success. However, the EV space is getting more saturated with every passing day. It will take a lot for the company to differentiate itself from its competition.
Furthermore, it recently announced it was progressing remarkably well in developing its solid-state battery technology. Multiple companies have thrown in their hat to commercialize the technology, which still seems like a distant reality. These companies, such as QuantumScape (NYSE:QS), have a truckload of money and partnerships with deep-pocked companies. Mullen has none of that and seems to be making claims that it is unlikely to back up.
It reported a hefty $36.5 million loss during the fourth quarter last year compared to a $4.9 million loss in the same period in 2020. Hence, Mullen reminds me of EV companies that make tall claims that just never come to fruition. It seems an obvious attempt to gain clout and raise capital to deliver its first EV by 2024.
Bottom Line on MULN Stock
Mullen Automotive is an EV company that has been around for a long time. It has progressed slowly over the years, but recent developments suggest that a change is in order. However, it has plenty to prove to the market before serious investors can get excited about placing their bets for the long haul.
It appears to be mostly hype with the company, which has been a constant for virtually every up-and-coming EV startup. Even if it manages to overcome its financial troubles and raise new equity, it has a tall order in establishing a position in the competitive EV niche. The sector is getting crowded with every passing day and it is tough to survive in the business. With MULN stock, it is best to reap profits from the short squeeze and avoid thinking about holding it for the long-term.
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On the date of publication, Muslim Farooque 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