Mullen Automotive (NASDAQ:MULN) is in the spotlight after short seller Hindenburg Research released a report on the electric vehicle (EV) company. Hindenburg claims Mullen is involved in several misdeeds, such as misleading investors with its solid-state battery announcements. The short seller also claims that the two electric vans that Mullen is manufacturing are actually vehicles ordered from China that are “rebranded with a Mullen logo.”
MULN stock is down approximately 4% at the time of this writing. With that in mind, let’s jump into the details of the short report.
Hindenburg Calls MULN Stock a ‘Total Electric Vehicle Hustle’
MULN stock is up over 200% during the past month. Solid-state battery advancement announcements and an interview with CEO David Michery have driven the stock’s gains.
In the interview, Michery claimed Mullen has an electric van order from a “major, major Fortune 500 company.” However, Hindenburg alleges that the vans in question were not manufactured by Mullen, and instead ordered from China. The short seller states that “import records” prove that Mullen recently imported two vehicles from China, one of each model.
Hindenburg also addresses a situation from 2019 to support the claim that Mullen is importing Chinese EVs. At the time, investors learned that the Mullen DragonFLY was actually built by Chinese manufacturer Qiantu Motors. After this news was released, Hindenburg alleges that Mullen “immediately defaulted on its payment obligations to Qiantu.”
Hindenburg further alleges that despite terminating an agreement between the two companies, Mullen continues to market the DragonFLY. The short seller says that in legal documents, Qiantu states that the situation is “an inexcusable misuse of Qiantu’s own intellectual property.” The DragonFLY is still currently available to reserve on Mullen’s website and is labeled “Coming Soon.”
Does Mullen Actually Have an Advanced Solid-State Battery?
Hindenburg also takes issue with recent updates from Mullen about its solid-state battery. The company recently released positive developments on its solid-state battery tests, which sent MULN stock soaring higher. However, the short seller claims the battery announcement is just a “rehash of testing the company had already announced in 2020.”
Hindenburg also alleges that Mullen misinterpreted the test results, according to the CEO of the company who conducted the tests. Hindenburg contacted the CEO, who stated: “We never would have said that. We never did say it and certainly wouldn’t have said it based on the results of testing that battery.”
Mullen announced a joint venture in 2020 to develop its solid-state battery. Hindenburg says it contacted a senior executive who was “familiar” with the joint venture. The senior executive said the joint venture “didn’t exist at all.” In addition, the executive called Mullen CEO David Michery “fast-talking” and a “hustler.”
In the past, Hindenburg says that Michery has led “5 failed penny stock companies.” Out of these five companies, the firm alleges that two had their securities registrations revoked by the U.S. Securities and Exchange Commission, while two terminated their securities registration. The last company merged with a “speculative gold mining company.”
Hindenburg has disclosed that it is short shares of Mullen stock. Mullen has not yet responded to the allegations.
On the date of publication, Eddie Pan did not hold (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.