What’s going on with Mullen Automotive (MULN) stock?

| April 3, 2022

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electric vehicle being recharged

Key Points

  • Mullen Automotivedebuted its latest FIVE EV model at the Los Angeles Car Show
  • MULN stock recently dipped below $1
  • The company has set a progressive road map of growth for the current year.

Mullen Automotive (NASDAQ:MULN) stock has been on quite a volatile run over the last couple of years. This business manufactured the first electric supercar back in 2007 which was titled the 7th fastest American production car by Forbes. When its CODA model was launched, the company was proud to be amongst the two certified EV stocks across the US. The other one was Tesla.

Recently, the firm debuted its FIVE EV model at the Los Angeles Car Show. And this triggered quite a spark in investor interest. So, let’s take a closer look at what’s going on with the MULN stock price and whether I should be considering this business for my portfolio.

MULN stock performance

MULN stock has picked up a bearish trend during the last two months of 2021. While entering the new calendar year, this trend continued. The company’s stock peaked at $14.78 in 2021 and dropped to the lows of $0.63 in Feb 2022, representing a drop of approximately 87% year-to-date.

After hitting the bottom, the MULN stock trend reversed. Ever since the share price has been growing steadily. Currently, it is trading at $2.87, representing a growth of approximately 355%, in less than a month. Needless to say, that’s impressive!

Can the MULN stock price continue to climb?

Since the MULN stock has been under the watchful eye of investors like me, it responds fairly quickly to company news and reports. The recent announcement, from the CEO, about acquiring a new client and a big contract triggered another surge in price.

Also, its announcement of an expected $65m in cash & equivalents for the quarter ending 31 March 2021 further strengthened the base for the rising MULN stock.

Ever since Mullen Automotive became a publicly-traded company, it has made tremendous progress. The financing has contributed immensely towards strengthening the balance sheet. Also, the business is on track towards fulfilling its current year commitments. Moreover, with the debut of the two versions of the new EV SUV and the announcement of the purchase of a vehicle manufacturing facility in Tunica, Mississippi, I believe Mullen Automotive is on track to deliver some impressive long-term performance.

Challenges and risks

Despite the fantastic front of EV vehicles, the company’s financials are concerning. It’s rather unsettling that the group has been incurring operating losses for a very long period. Furthermore, this operating loss is consistently increasing. The net loss has increased by 47%, from $30m in the fiscal year 2020 to $44m in the fiscal year ending Sept 2021.

To further add to the alarming financial position, the cash generation is disturbingly low, considering the huge amounts of cash required for an EV manufacturer. But the recent announcement of high expected cash in the recent quarter has revived investor hope in the MULN stock.

Will I be buying some MULN Stock?

Mullen Automotive wants to play amongst the big players of the EV market, which I believe is very intimidating. Besides, competing with the likes of Tesla, Ford, and General Motors is not an easy play.

The MULN stock recently rose to fame owing to its unexpected performance in the stock market. After a good one year, the share price crashed back down below $1.

No doubt, the company is highly optimistic about the future and has an excellent road map for growth. But the current financial position is worrisome for me as an investor. Therefore, I’ll be keeping this business on my watchlist for now.

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Saima Naveed does not own shares in any of the companies mentioned. The Money Cog has no position in any of the companies mentioned. Views expressed on the companies and assets mentioned in this article are those of the writer and therefore may differ from the opinions of analysts in The Money Cog Premium services.