Once a hot commodity in 2022, Mullen Automotive (NASDAQ:MULN) has since struggled to keep its head above water. In regard to the latest drama, the countdown is now on for Mullen to meet its original delivery target for a purchase order from an enterprise-level client. At the same time, management’s lack of focus in general may hinder MULN stock.
Specifically, on Dec. 14, 2022, Mullen disclosed a purchase order for 6,000 Class 1 electric vehicle (EV) cargo vans from Randy Marion Isuzu, LLC, a member of the Randy Marion Automotive Group (RMA). Per the press release, the firm order agreement is worth approximately $200 million. At the time, the announcement led to considerable buzz for MULN stock.
Randy Marion, CEO and founder of RMA, had the following to say about the order:
“We see a tremendous opportunity with the Mullen commercial portfolio, and the launch of the commercial van could not come at a better time […] There’s significant pent-up customer demand for Mullen to fulfill. I have many customers looking at me to find product for their companies.”
On the other end, Mullen Chief Commercial Officer John Schwegman said the deal symbolized a “real vote of confidence” for the company Unfortunately, though, that confidence may take a devastating blow if Mullen doesn’t pull through. Headlining the press release is a message that deliveries for the order are to commence in the first quarter of 2023.
Obviously, the end of Q1 is approaching in a matter of days, with Mullen providing little-to-no update. The company unhelpfully reiterated the basic terms of the deal in its latest statement.
An Undisciplined Approach May Backfire on MULN Stock
Fundamentally, what may be negatively affecting the sustained momentum of MULN stock is a lack of focus and discipline. For instance, early last June, CEO David Michery said in an interview that Mullen would reveal “everything” about its delivery of an electric van to a Fortune 500 company at the end of Q2. However, June 30 came and went with no update as promised.
It’s quite possible, then, that if Mullen can’t make good on a PR disclosure deadline, investors will view delivering 6,000 EVs as a much bigger challenge. Notably, MULN stock is down about 10% in the afternoon hours Wednesday. For the trailing week, it’s down about 12%.
Adding to the perplexity of MULN stock is the company’s deal with Chinese automaker Qiantu Motors. Per InsideEVs, Mullen says it will “reengineer and redesign” the Qiantu K50, an electric-powered supercar, to meet homologation requirements for U.S. certification. The K50 is expected to reach 60 miles per hour (mph) from standstill in 1.95 seconds. The premium variant should also reach a top speed in excess of 200 mph.
Still, Mullen represents a deeply embattled enterprise that might not afford multiple ambitious initiatives. Per investment resource Finbox, MULN stock scores an “F” grade for profit health, price momentum, cash flow health and growth health. Therefore, the company’s most realistic avenue for funding is via equity dilution — something with which it already has a history.
Why It Matters
At the time of this writing, MULN stock trades for around 13 cents per share. However, the Nasdaq requires a minimum $1 bid price for its listed securities. While Mullen did recently announce receiving a 180-day extension, this matter only applies more pressure on this already beleaguered company.
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On the date of publication, Josh Enomoto 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.
