- Mullen Automotive (MULN) short interest is falling.
- The EV market is finally adjusting to a world that isn’t driven by SPACs or meme stocks.
- Valuations on some of the top names is still outrageous given bigger players entering the market.
It makes perfect sense that Mullen Automotive (NASDAQ:MULN) stock has a collection of proponents and detractors. That’s healthy. And so is its meager sub-$400 million market cap.
The fact is, it’s a speculation stock, just like most of the other electric vehicle (EV) makers out there.
And this fascination with electric vehicles goes all the way back to the roots of the auto industry. Over 100 years ago, at the turn of the 20th century, there were electric vehicles competing at races, and growing in popularity in Europe and the US.
William McKinley is said to have been driven to the hospital in an electric powered ambulance. And he has the title of being the first president to ride in an automobile. His vice-president, Teddy Roosevelt, also got a ride in an electric car at the time and went on to be a great fan of cars.
My point here is that there are always fascinations and trends that seem to bubble up every century or so. It’s long enough for everyone living to forget what happened back then. And in a society where progress is the name of the game, history is always stuck on the roof rack.
|MULN||Mullen Automotive, Inc.||$1.36|
MULN Stock Is a Timely Addition to the EV Pack
Many people still know little about MULN stock or the company it represents. But the fact is the company has a decent strategy and is making the right steps to build out a line of electric cars and delivery vans.
It didn’t roll out in the initial SPAC- and meme-fueled wave that hit during and after the pandemic. That means it isn’t trading at some exorbitant valuation that’s entirely unrealistic.
When Tesla (NASDAQ:TSLA) trades at a market cap of more than $1 trillion without selling 1 million cars in a year yet, something is out of kilter.
The market’s fascination with the billionaire maverick CEO Elon Musk is a majority of the reason the stock is priced so wildly. It’s the story, not the company.
Rising competition by major automakers with well established service and sales channels as well as global parts inventories and distribution is here now. And while the U.S. press made hay over Chinese leading EV maker Nio (NYSE:NIO) having to shut down production, little was said that TSLA also shut down its Chinese facility for most of March as well. And when China decides it’s in the country’s best interest to support Chinese brands, TSLA’s China operations will come under stress.
But this isn’t just about knocking TSLA. Other EV makers are similarly overpriced considering their long path to profitability, much less global dominance.
Measured Risk vs. Blind Risk
The simple fact is, there are again plenty of EV makers to choose from now. The real question is whether you want to take a measured risk or a blind risk in the EV sector?
A measured risk is buying a company that has a simple platform with realistic goals and some diversification. A blind risk is buying the coolest, hottest name out there so you can tell your friends you’re a rebel too.
Certainly, TSLA and other EV investors have made money. But we’re investing now, not then.
And right now, in this market, taking measured risks is a much better way to go until all this selling and rotating take their courses. The easy money is done for now. What’s your move?
Last month, MULN CEO David Michery said that it’s landing a major Fortune 500 company as a client and will announce in Q2. Real customers are good things. And with the stock trading 74% down year-to-date, it has more upside than downside.
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On the date of publication, GS Early 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.