Mullen Automotive (NASDAQ:MULN) shares are up 7% today, currently trading at $3.07 per share. The stock opened today at $3.02 per share, a gain of approximately 5.2% compared to the closing stock price of $2.87 on Friday, Apr. 1. Why is it moving up and should you consider MULN stock a buy?
There has been news released today about Mullen Automotive promoting “John Taylor to Senior Vice-President of Manufacturing and Strategic Planning.” Investors seem to be excited about the fact that John Taylor was a former executive at Tesla (NASDAQ:TSLA). They hope he will bring his vast expertise in a bellwether company for the automotive industry to Mullen.
Taylor started his career at General Motors (NYSE:GM) where he got “involved with 11 major automotive vehicle launches while serving as launch manager, operations manager, and machine and equipment manager, among other roles.” Most notably, he was one of the first 50 employees at Tesla. This is important news as Mullen is focusing on executives to support and possibly speed up production of its line of models, like the Mullen FIVE electric crossover and its DragonFLY sports car.
Taylor is expected to help Mullen explore domestic and international manufacturing opportunities. Perhaps we should even expect more vehicle launches. Still, today’s news does not make this penny stock a buy. Here is why.
Mullen has not yet generated any revenue. Its FIVE model crossover is expected to reach the market no sooner than 2024. In 2021, Mullen reported a net loss of $44.24 million and burned $17.08 million in cash. The firm is expecting to bring its electric cargo van, the Mullen ONE, to the market in the second quarter of 2022.
This should be the start of bringing revenue to the business, but investors should wait for the company’s first quarter as a public company. Investors should focus on the amount of cash and cash equivalents on the balance sheet. If Mullen shows a growing cash burn problem, which is highly likely, then this will not be good news as it may signal future stock offerings to raise cash to support its plans and program development.
Keep an eye on MULN stock for further news and progress on its ONE model, but the stock is not a buy right now.
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On the date of publication, Stavros Georgiadis, CFA 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.
