The electric vehicle (EV) market proposes a new Tesla rival. Mullen Automotive, Inc (NASDAQ: MULN) has been making waves these weeks, although larger timeframes show that the MULN stock has been declining since it went public at the end of last year.
The EV market has been in the spotlight amid surging oil prices, but how will MULN eventually show itself? Let’s look into fundamentals to see whether it can succeed in the medium and long term.
Meet Mullen Automotive
Mullen Automotive is a new EV maker that recently got listed on NASDAQ, although its $30 million market cap reflects its status as a startup. The Californian company produces and distributes EVs and also operates CarHub, a digital platform that leverages AI to offer an interactive solution for buying, selling, and owning a car. MULN also provides battery technology and emergency point-of-care solutions.
In November 2021, MULN started trading on NASDAQ at around $13, but it has been pressured by bears to the point of bottoming out at only $0.50 at the end of February. MULN itself said that it was unaware of any business reason for the price collapse. Anyway, after finding strong support at that level, the share price bounced back and surged by about 300% to almost $2 on February 28, after announcing some major progress on its battery technology.
The price then corrected to the current level at $1, but it’s important to note that the recent spike came amid record volumes, suggesting that bulls are ready to take control of MULN.
Mullen’s Flagship Product Looks Gorgeous
Obviously, when reviewing any new EV player, you’d like to know everything about the actual car it does propose and where it can be positioned among competitors. Tesla has set a very high standard right from the beginning. Thus, any new EV player has to impress, and boy, MULN does a good job on so many levels!
In mid-November, the company debuted with its Mullen FIVE EV crossover at the Los Angeles International Auto Show.
The fact that it won LA Auto Show’s ZEVAS Award for the “Top SUV Zero Emission Vehicle (ZEV)” is very telling, especially given that Rivian R1S and Lincoln Aviator Grand Touring were also on the list.
MULN CEO David Michery said then:
“The FIVE is a very competitive EV that was able to go up against an impressive set of competitors, including both legacy brands and exciting new startups. The fact that so many people voted for the FIVE, helping us beat the other finalists, the Rivian R1S and the Lincoln Aviator Grand Touring, by a huge margin to win this award is a tremendous testament to what we are trying to accomplish.”
The FIVE is built on an EV crossover skateboard platform that offers multiple powertrain configurations and trim levels.
With a promoted range of 325 miles, the SUV has a bold design with curvy lines. The price starts at $55,000 for the basic model, and there will be more of them.
Mullen FIVE Makes MULN Stock A Potentially Great Stock to Own
$30 million is not the valuation you’d expect for a company whose car beats Rivian and Land Rover. Despite the bearish pressure, there are many reasons to think that MULN should go back above the $10 mark soon.
Mullen has its own powertrain, battery, and charging technology, and its facilities are in the US. So far, this company has all the ingredients to become successful. Here are the eight reasons to consider this a good penny stock to own:
- #1 Strong demand – the demand for its vehicles rose immediately after the debut on the LA Auto Show, forcing the company to increase the limit of reservations. Jason Putnam, VP of Marketing, said:
“We’ve decided to increase the limit of the total number of FIVE reservations from 5,000 to 25,000 vehicles due to the strong demand in the first three days of the show. By establishing a 25,000 reservation limit, this allows us to offer a very special trim option package that will only be available to our initial “launch” customer set.”
- #2 Great product – Mullen FIVE is a nice-looking EV SUV with impressive specs. It reaches the 60 mph speed in only 3.2 seconds, with a more powerful version to be revealed soon. More importantly, the car will likely be appreciated by the public. Last year, the company commissioned consulting firm GO GROW, LLC (GO) to design and develop a comprehensive, consumer-facing, market exploration of the EV category and to field and test a future-seeing, conceptual execution, and benchmark comparison of Mullen FIVE product offering against competitors like the Ford Mach-E and Tesla Model Y. The study revealed that Mullen generated very strong metrics across the continuum of test variables, both relative to the competitive benchmarks and on an absolute basis.
- #3 Improving finances – at the beginning of February, MULN said it was strengthening its balance sheet by securing $4 million in funding through a combination of the initial drawdown of $2.5 million under a $30 million equity line from Esousa Holdings, LLC, and debt financing from existing shareholders, bringing the total funding received over the previous two months to more than $40 million.
- #4 Great partnerships – Mullen recently unveiled a series of partnerships with ARRK, Dürr, and DSA Systems for automotive engineering, vehicle production systems, and Over the Air (OTA) and vehicle system diagnostics, respectively. The company expects these strategic developments to play a crucial role in bringing the FIVE to market with the latest technology in the least amount of time.
- #5 Great technology – at the end of February, the stock price extended gains after Mullen provided an update on its next-generation solid-state polymer battery technology, which it says is a significant advancement over today’s current lithium-ion batteries. The testing of solid-state polymer cells revealed the potential for a 150-kilowatt-hour battery pack that delivers over 600-plus miles of range and highlights an 18-minute DC fast charge which can yield over 300 miles of range. Mullen is working towards utilizing solid-state polymer battery packs in its second generation Mullen FIVE EV crossovers, with in-vehicle prototype testing set for 2025. Mullen’s first-generation FIVE EV crossover, due in late 2024, is planned to launch with traditional lithium-ion cell chemistry. The company is also looking into other advanced battery technologies, including lithium-sulfur and lithium-iron-phosphate. CEO David Michery said:
“The test data collected shows an impressive outcome and future for solid-state batteries. To sum up, we tested our 300 Ah (ampere hour) cell which yielded 343 Ah at 4.3 volts, and the results surpassed all expectations. We can say with almost certainty that this technology, once implemented on the Mullen FIVE, will deliver over 600 miles of range on a full charge. The future is bright for Mullen Automotive.”
- #6 Endorsement from experts and investors – earlier this year, HotCars recognized MULN for its potential to be a gamechanger in the EV market. The company and its EV crossover, the FIVE, were ranked No. 2 among the publication’s annual “10 EV Startups to Watch Out For” honorees for 2022.
Meanwhile, many investors consider MULN a top penny stock to watch in March and this year.
During the last few months, MULN earned media coverage in over 40 publications, including Automotive News, Wards Auto, Bloomberg, Barron’s, InsideEVs, Robb Report, and Carbuzz.
- #7 Ambitious future – besides its crossover, Mullen is on track to deliver the first EV cargo van fleet vehicles in the second quarter of this year. Also, high-performance versions of the Mullen FIVE are due to arrive in late summer 2022. Mullen has successfully filed over 120 patents in 24 countries for the Mullen FIVE EV Crossover and thus is ready to expand internationally.
- #8 Fast-growing market – the EV market, in general, continues to grow fast, despite the accelerated start in the 2010s. EV registrations surged despite the pandemic, and the market is backed by the US government as well as other governments in an effort to curb carbon emissions.
In February, the Biden administration rolled out a plan to allocate $5 billion to states to fund electric vehicle chargers over five years as part of the bipartisan infrastructure package.
Some Concerns to Be Aware Of
Despite the increased media attention, MULN might still be a risky bet. To begin with, it expects to deliver its competitive cars using solid-state batteries only by the end of 2024, and many things may change until then. Besides this, Toyota and other companies are also building upon this technology that can increase the EV range.
Another concern is that the company is experiencing growing losses, even though it is improving its balance sheet. It reported a $4.9 million net loss to end the Q4 2020 and a $36.5 million loss by Q4 of 2021. With the increased attention, it may manage to raise the needed capital to cover liabilities.
Mullen Automotive is a discount entry opportunity under $2 per share. The risk/reward dynamics are just too compelling. If Mullen really sticks to its promises, its share price can skyrocket. Other small EV companies have minted many millionaires and a few billionaires.
Bulls can also force a great outcome in the medium term as MULN stock is turning into a short squeeze candidate with over 8% of the float being shorted. 2021 was the year for AMC and GameStop Apes whereas we think 2022 can be the year for MULN apes.
As always, good luck to all (except the shorts)!!
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Image by Sergei Tokmakov Terms.Law from Pixabay