Mullen Automotive (NASDAQ:MULN) stock quickly lost most of what it gained after closing its acquisition of bankrupt Electric Last Mile Solutions (ELMS).
The deal brings Mullen an Indiana plant where it says it will make an electric SUV called the Five. But Mullen lacks the cash to go into production.
Shares jumped 13% on Dec. 1 but fell 8% overnight. Skepticism about the company’s long-term future remains high.
Will Mullen Make It?
Mullen stock started trading today at 20 cents/share, with a market capitalization of $360 million. A year ago, the stock was at $6.60/share. As electric start-ups like Lucid Motors (NASDAQ:LCID) and Rivian Automotive (NASDAQ:RIVN) have put cars into production, and mainstream automakers like General Motors (NYSE:GM) and Ford Motor (NYSE:F) have moved into the sector, Mullen has been left at the starting gate.
CEO David Michery, a former music executive, has been long on promises but short on performance. A prototype Five has been touring the country. The company has also been promising to make commercial vehicles in Mississippi since buying Bollinger Motors in September.
But Mullen’s most recent balance sheet, dated in June, showed it with just $61 million in cash. Mullen had to raise $150 million from current shareholders to buy ELMS.
Bears like our Brenden Rearick note that both ELMS and Bollinger were on their last legs when Mullen acquired them. Michery has also sold 2.53 million shares as they have fallen, not a move to inspire investor confidence.
MULN Stock: What Happens Next?
Michery still expresses confidence in Mullen, but the stock has been under the threat of delisting since September. It last traded at over $1/share in July.
In business 1+1 sometimes equals 2, and sometimes it equals 1. But it can also be the case that even 1+1+1 can equal zero. This may be such a case. I wrote back in May that I don’t think Mullen has a future and I stand by that view.
On the date of publication, Dana Blankenhorn held no positions in any companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
