The Downturn Is Far From Over for Mullen Automotive

  • Mullen Automotive (MULN) stock dipped 80% since its reverse merger
  • Headwinds for electric vehicle startup stocks will carry on as EV rivalries grow
  • The downturn will not end until Mullen brings its finished vehicles to the market
The Mullen Five vehicle is displayed at the 2021 LA Auto Show media day in Los Angeles, November, 18, 2021. MULN stock.

Source: Ringo Chiu / Shutterstock

Mullen Automotive (NASDAQ:MULN) is a new player in the electric vehicle (EV) industry. MULN stock went public on Nov. 5, 2021 after it combined with Net Element (NETE) through a reverse merger.

MULN stock has had a rough time since its listing. After peaking at $15.89, the stock declined significantly, falling more than 80%. Most of this dip occurred in 2022, registering a loss of 48.4% year-to-date to $2.72 per share.

Mullen’s abrupt price correction is not a surprise given its early business stage. Shareholders should wait before buying MULN stock due to unfriendly momentum in EV stocks and the elevated risks of a small-cap electric vehicle firm.

MULN Mullen Automotive $2.72

What’s Happening with MULN Stock

Mullen Automotive is an emerging EV manufacturer with two prototypes: the Five EV Crossover, which is expected to start production in the fourth quarter of 2024, and the One EV Cargo Van. It recently announced the acquisition of a manufacturing facility in Mississippi and strengthened its balance sheet, which might please some shareholders.

While these announcements are encouraging for the development of the firm, there is still a long way to go. With an excess cash position of only $65 million, MULN stock will likely need additional capital to start mass-producing EVs. This implies it will need to issue more debt or increase capital, which will dilute current shareholders.

Besides, the company does not generate any revenue at the moment and investors should not expect any until 2024. Therefore, MULN stock will mainly be driven by speculative interest. Apart from a major innovative breakthrough from the company, I see no material fundamental catalyst that will drive the shares upward.

EV Valuations Tumble With Growing Competition

Related stocks have profited largely from rising investor interest in the booming EV market. Last year, “the electric vehicle market was valued at USD 370.86 billion in 2021, and it is expected to reach USD 1298.32 billion by 2027, recording a CAGR of 23.35% over the forecast period 2022-2027,” according to Mordor Intelligence.

EV valuations have reached historical highs last November. The Global X Lithium & Battery Tech ETF (NYSEARCA:LIT), a proxy of the EV complex, topped at $96.43 per share. Since then, the industry cooled as rivalries between traditional carmakers and EV startups grew.

Legacy automakers started investing massively in the development of EVs in the past years, and these efforts are starting to pay off. A growing number of EV models are being brought into the market, generating fewer opportunities for younger companies.

On the other hand, more and more EV startups such as Mullen, Lordstown Motors (NASDAQ:RIDE) and Rivian (NASDAQ:RIVN) raised capital last year trying to improve EV prototypes and reach mass production rapidly.

Yet while some of these companies have promising projects, most of them are still lagging behind their largest peers in brand recognition, execution and scalability. Ramping up production in the EV space can be painful and requires extensive amounts of capital that most startups do not have. In this context, the road for these EV startups might be bumpier than most of the early shareholders think.

Should You Buy MULN Stock?

With insignificant revenue and no EV deliveries expected until 2022, I have a bearish view of MULN stock. In spite of the steep stock correction, there is no material fundamental catalyst to send the automotive stock to new highs in the following months.

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On the date of publication, Cristian Docan 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 Publishing Guidelines.

Cristian Docan, a contributor for, has been writing stock market-related articles for Seeking Alpha, Stocknews, and Wealthpop since 2017. He takes a fundamental and technical approach in evaluating stocks for readers, focusing on momentum investing and macro-driven strategies.

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