There Are Way Too Many Question Marks Surrounding Mullen Automotive

  • Mullen Automotive (MULN) has done poorly since it started trading after its reverse merger.
  • MULN stock seems like it should have a higher valuation, but the fundamentals and a short seller’s report suggest otherwise.
  • Avoid Mullen shares until more information is available on this electric vehicle maker.
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 small company aiming to make a big splash in the electric vehicle (EV) market. MULN stock came to market via inauspicious beginnings. Unlike most EV firms, which used special purpose acquisition companies (SPACs) to go public, Mullen used a reverse merger to launch its stock onto the Nasdaq.

Historically, reverse mergers have a poor track record of performance compared to traditional initial public offerings (IPOs). And so far, MULN stock’s price performance has followed that historical trajectory.

MULN Mullen Automotive $1.20

What Is Mullen Automotive?

Mullen Automotive aims to take its place alongside large, diversified American automotive companies. Its roots date to 2014, when it started acquiring businesses such as EV maker Coda Automotive.

Along the way, Mullen picked up a manufacturing facility in Mississippi. The fusion of these things seemingly gave Mullen a pathway to the market for its own EVs over time.

On top of that, Mullen is also active in the battery space. It claims to have technology that allows for electric vehicles to have a 600 mile range. These batteries, Mullen says, also have minimal degradation over hundreds of charge and discharge cycles.

This, if true, would give Mullen a major competitive advantage over EV rivals such as Tesla (NASDAQ:TSLA), which use battery packs with weaker capabilities.

Why Isn’t MULN Stock Worth More?

At first glance, it might seem like Mullen should garner a high valuation in the market. The company has its manufacturing facility and an attractive prototype vehicle called the Five. It has plans for a cargo EV, plus there’s its much-touted next-generation battery technology.

Yet, add it all up and MULN stock is trading for just over $1 per share today. In market capitalization terms, Mullen Automotive is currently only going for $340 million. That’s seemingly pennies on the dollar compared to the value of what Mullen purports to be capable of producing.

As you might guess, the issue here is that traders are deeply skeptical of Mullen’s claims. The company, for example, spent just $3.6 million on research and development over the past 12 months. $3.6 million is not generally the sort of budget you’d expect from a company launching next-gen batteries and futuristic electric vehicles at the same time.

Additionally, as of March 31, Mullen had just $65 million in cash. It’s unlikely the company will be able to launch either its batteries or an EV with that sort of limited financial capacity.

Short Sellers Take Aim

These general concerns were cemented recently when well-known short-selling firm Hindenburg Research blasted Mullen, effectively saying the company was doomed from the get-go.

Hindenburg pointed out various instances where Mullen simply purchased technology from China and rebranded it as its own. For another thing, the short seller provided evidence that there is not much going on at Mullen’s manufacturing facility in Mississippi.

Among other assertions, Hindenburg claimed some of Mullen’s early vehicle orders were of dubious quality, and that photos of its manufacturing tools came from stock photo services.

For anyone that would quickly brush off the Hindenburg report, don’t forget it also exposed Nikola’s (NASDAQ:NKLA) infamous prototype vehicles. Hindenburg has been active in shining a light on questionable activity in the EV space for several years now, and any potential MULN stock owners should take this report seriously.

The MULN Stock Verdict

It’s simply impossible to own MULN stock at the moment. For one, we’ve already seen so many EV companies that dramatically overpromised and underdelivered in terms of their technology and manufacturing capabilities.

Two years ago, before companies like Nikola were exposed for their shortcomings, it might have been okay to take EV companies at face value. Now, however, investors must be much more demanding before investing their hard-earning capital.

Additionally, EV stocks as a sector have collapsed. There are companies that are far closer to becoming successful EV producers who have seen their shares fall considerably. In this environment, it makes little sense to bet on something as speculative as Mullen.

It would likely take billions of dollars to bring all of Mullen’s potential business ventures to fruition. In this environment, with so much skepticism and pessimism around, it’s hard to see how Mullen will be able to fund its future plans without painful dilution.

It’s clear EVs are in a major sector bust right now. That being the case, this isn’t the time to buy a weaker player in the field like MULN stock.

On the date of publication, Ian Bezek 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.

Ian Bezek has written more than 1,000 articles for and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek.

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