There’s been plenty of bearish price action in the market today. However, investors in the electric vehicle (EV) sector may note that early-stage EV maker Mullen Automotive (NASDAQ:MULN) is seeing some particularly vicious downside in today’s session. An 11% move lower today has sent MULN stock to a fresh split-adjusted 52-week low today. Given how the company’s EV peers have performed thus far this year, this performance certainly isn’t stellar.
Of course, there are plenty of reasons for this plunge today. Yesterday’s news that a partnership between Global EV Technology and Mullen may have been more story than substance is one key component of investors’ bearishness today. A purported $10 billion contract with Saudi Arabia resulting from this partnership may or may not be fictitious (and that’s a big chunk of change for investors to be concerned with).
Adding to concerns are fresh reports today around the validity of a $15.75 million deal between Mullen and MGT Lease Company for Class 3 cab chassis EV trucks. As fellow InvestorPlace contributor Eddie Pan pointed out, the Reddit community has done some rather compelling due diligence on this deal. On the whole, the $16 million deal looks suspicious at best, leading many investors to question just what is going on behind the scenes at Mullen right now.
What Is Going on With MULN Stock?
The EV sector has been one of the hottest places for venture capital over the past five years. The rise of Tesla (NASDAQ:TSLA) and other household names has prompted many investors to put their money to work in more speculative, early-stage companies. The idea is that if investors can grab a piece of the “next Tesla,” even a small investment can turn out to be life-changing.
For Mullen, a company focused on electrifying both consumer and light industrial vehicles; there’s certainly a lot to like about the company’s story and potential growth. This is what has enticed investors to put their capital to work in Mullen in the past.
Now, the key question investors are posing right now is how much of what the company is selling is real and tangible and what may be misleading. There’s been no shortage of bad actors in this space in recent years, driven by an influx of liquidity and a lack of questions in the past. However, it’s clear that the market is wising up to the mistakes other companies have made thus far.
For now, Mullen appears to be one company that’s on probation, even with retail investors. That’s not a great place to be right now.
On the date of publication, Chris MacDonald 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.