It’s been an ugly stretch for electric vehicle (EV) stocks. While that includes the juggernauts like Tesla (NASDAQ:TSLA), it also includes the smaller companies like Mullen Automotive (NASDAQ:MULN). Case in point? MULN stock is down about 10% on Monday.
At today’s low, shares changed hands at 26 cents a share. While that’s still more than 40% above the 52-week low, the trend has not been kind. However, it has been interesting.
Short interest was being flagged as a potential catalyst for MULN stock last week. Shortly after, the stock more than doubled in a three-day stretch. After the high on Thursday, shares are already down more than 30%.
So when investors ask, “Why is Mullen stock down 10% today?” the answer can be pretty easy: Volatility.
When we look at a stock like Tesla, it is not performing well. Shares have now made new 52-week lows in five straight sessions. That’s indicative of a bearish trend as bulls continue to bail.
At the same time though, almost all EV stocks are under pressure. The Chinese EV stocks were doing better lately on the promise of a reopening economy in China, but the sellers have caught up with them as well.
MULN Stock Tries to Avoid New Lows
In other words, there’s been no escaping the selling pressure in these stocks. Yet at the same time, Nio (NYSE:NIO), Tesla and others have solid growth, with streamlined production and deliveries. These automakers are true businesses and while they can still falter, they have long-term promise.
That’s not to say Mullen Automotive is set to fail and MULN stock is destined to trade over the counter, but it’s a much bigger risk than a Tesla or Nio at this point.
The recent volatility in the stock price does little to calm investors’ nerves. Shares shouldn’t double in a three-day stretch, while a short-squeeze is far from the most bullish catalyst investors can rely on — at least on a fundamental basis.
There’s not much analyst coverage on MULN stock. However, while they do expect revenue to double this year to about $131 million, the analyst expects just 11% growth in sales next year.
While Mullen did receive a nice-sized order last week — good for 6,000 cargo vans from Randy Marion Isuzu, LLC — there are still concerns about the company from a profit and loss perspective.
For now, fundamental investors may want to look elsewhere in the EV space. The exception is if they are looking for a purely speculative space.
On the date of publication, Bret Kenwell 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.