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The Hype Behind Mullen Automotive Could Be Overplayed

Risk-tolerant investors might see a lot to like in Mullen Automotive (NASDAQ:MULN) stock. The electric vehicle company out of Brea, CA hasn’t really accomplished much yet commercially. And it doesn’t garner much headline ink either. For the most part, it is simply an EV company, among many, hoping to make a splash.

electric vehicles at a recharging station

Source: Sopotnicki / Shutterstock.com

If investors were to judge it based on its performance alone without recent news, they’d probably shy away. But given recent news, it looks like risk-tolerant investors will be increasingly interested in Mullen Automotive.

Rising Interest in MULN Stock

The reason investors will be talking more interest in Mullen Automotive is that on Feb. 28 the firm announced that it has made progress in the realm of solid-state battery technology. 

EV followers will be very aware of the importance of solid-state battery development to the EV industry. As Samsung explains, “A solid-state battery can increase energy density per unit area since only a small number of batteries are needed. For that reason, a solid-state battery is perfect to make an EV battery system of module and pack, which needs high capacity.”

They basically represent a quantum leap over current lithium-ion battery systems used in EVs. That’s where Mullen Automotive comes in. The company revealed that its solid-state polymer battery technology is moving forward with impressive results.

Per the press release:

“Mullen’s testing of solid-state polymer cells reveals the potential for a 150-kilowatt-hour battery pack that delivers over 600-plus miles of range and highlights an 18-minute DC fast charge which can yield over 300 miles of range. Mullen is working towards utilizing solid-state polymer battery packs in its second generation Mullen FIVE EV Crossovers, with in-vehicle prototype testing set for 2025. Mullen’s first-generation FIVE EV Crossover, due in late 2024, is planned to launch with traditional lithium-ion cell chemistry.”

So What?

Other, more established firms including QuantumScape (NYSE:QS) and Toyota (NYSE:TM) have been making progress in solid-state battery technology for quite some time. They have announced similar timelines to commercialization. Mullen Automotive is a relatively unknown EV firm. Without this recent battery news investors would likely remain completely unaware of its existence. 

That’s not a knock against it, but it raises a possibility. Unknown EV companies often make bold claims that later turn out to be false. For example, QuantumScape faced a lot of scrutiny for its claims about its technological prowess. And Nikola (NASDAQ:NKLA) suffered through an era defined by false claims which thankfully looks to be over. 

My point is that Mullen Automotive has a lot to gain by throwing its hat into the solid-state battery conversation. There is no evidence that it has fabricated any claims. I’m not implying that they have. But the company gains clout whether anything comes of this or not. 

That brings me to my next point.

Weak Company

Mullen Automotive is a company undergoing rapidly growing losses. The company reported a $4.9 million net loss to end the final quarter of 2020. That loss swelled to $36.5 million by Q4 of 2021. 

Mullen Automotive is a company that is balancing mounting losses and a goal to produce an EV by 2024. It needs more attention so that investors will place some equity capital into it and raise its stock price.

What to Do With Mullen Automotive

To me, MULN stock simply looks too risky. But to a more risk-tolerant investor, there’s a legitimate argument behind investing in it. Maybe it has the ability to make significant headway in breaking through the technological bottlenecks solid-state batteries pose. If so, it could rise quickly. 

Maybe it’s worth investing simply because MULN stock was trading above $12 back in December. It could rise pretty quickly given the battery news. Since it already traded much higher, investors might be willing to push capital in. But for risk-averse investors it remains one to pass on. 

On the date of publication, Alex Sirois 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.

Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks.Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.

Article printed from InvestorPlace Media, https://investorplace.com/2022/03/the-hype-behind-mullen-automotive-muln-stock-could-be-overplayed/.

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