Today, a report from Hindenburg Research is pushing Mullen Automative (NASDAQ:MULN) stock down. The electric vehicle (EV) producer shocked markets in recent months; after showing EV battery success, it became an overnight sensation. According to Hindenburg, though, it’s simply “the latest in a long line of EV hustles.” The recent declines in MULN stock don’t do much to discredit this claim.
MULN stock has been turbulent since Hindenburg released the report this morning. It began the day by falling, only to rise and then fall again. As of this writing, it is down about 4% for the day. Based on its current pattern, another rebound doesn’t seem likely.
A quick look at the report’s executive summary reveals why this stock is suffering. In the first line, Hindenburg notes the company “has yet to produce a sellable vehicle.” Things get worse from there, citing the company’s questionable claims and production constraints. Hindenburg ends the report by describing Mullen as “one of the worst” in a line of struggling EV producers.
What’s Happening with MULN Stock?
Negative coverage from a market research firm never helps a stock. Of course, some companies can shake it off and rebound quickly. But that seems unlikely in this case. Hindenburg’s findings call into question almost everything that helped send MULN stock into the green last month. Here are some of the firm’s top concerns:
- “Mullen recently press released an update on its battery testing, sending its stock soaring 145% in a day. In reality, the ‘news’ appears to be a rehash of testing the company had already announced in 2020.”
- “Mullen’s battery claims were based on technology licensed from a 1-year-old Chinese battery technology company. After hyping the importance of the relationship, Mullen made one payment under the deal and promptly terminated the relationship. The Chinese company’s website no longer works.”
- “Mullen claims its former pizza car manufacturing facility in Mississippi is stocked with state-of-the-art equipment and machinery, but photos and video of the facility show it has limited equipment.”
This is only a small sample of the reasons why Hindenburg says MULN stock is a “fast talking EV hustle.” In the report, the firm compared Mullen to other struggling small-cap EV producers like Lordstown Motors (NASDAQ:RIDE) and Nikola (NASDAQ:NKLA). But maybe more troubling is the fact that Mullen’s largest shareholder is Terren Peizer. As an investor, Peizer has a track record of taking large positions in companies that implode after massive surges. This list includes Top Ships (NASDAQ:TOPS), MusclePharm (OTCMKTS:MSLP) and the delisted MedClean.
What It Means
These types of findings suggest Mullen is more of a meme stock than anything. It was easy for the company to catch the attention of retail investors looking for contrarian plays against Wall Street. However, the sustainability of MULN stock has come sharply into focus. Now, even r/WallStreetBets won’t be able to ignore its red flags.
All told, this stock looks like it’s heading straight to the bottom. It could be permanently pushed down if Hindenburg’s findings gain further traction. Even the addition of a former Tesla (NASDAQ:TSLA) employee won’t be able to save the stock and its overinflated success.
When it comes down to it, some small EV companies are built purely on speculation. Their growth is often unsustainable. MULN stock has been driven mainly by superficial hype and short interest, two things that make for an ill-advised investment.
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On the date of publication, Samuel O’Brient 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.