$MULN - All the DD You'll Ever Need
As it continues to develop its Mullen FIVE and solid-state polymer battery, Mullen Automotive Inc. (NASDAQ: MULN) could revolutionize the EV market once its flagship car launches. While MULN stock lost much of the momentum it gained in March, the hotly anticipated results of its potentially revolutionary solid-state battery and updates on its in-house EV battery pack production facility are catalysts to watch for. Further down the line, the company will start its national test drive tour in October featuring its flagship Mullen FIVE which could bring MULN stock back into the spotlight.
Fundamental Analysis
MULN first captured the spotlight for its short squeeze potential – a combination of high short interest, low float, and positive news. Currently the off-exchange short volume ratio is around 23.7% and short interest is around 14.03% – a sharp reduction from its short interest upon its battery announcement at the end of February.
Fundamentally, Mullen’s potential short squeeze is being fueled by its impressive solid state-battery technology. The company filed a number of trademarks for its EV battery technology in 2021 which is a sign that February’s announcement was a long time coming. It’s important to mention that if this technology proves feasible, Mullen would be able to offer a better driving range than both Tesla and Lucid. While the Mullen FIVE is not scheduled to roll out until 2024, the company’s CEO Michery noted that “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.”
This was the spark which made MULN one of the most active tickers on StockTwits and Reddit for several weeks. While some of the momentum has died out since February, MULN could be re-energized with the results of its battery testing which is currently being conducted by the Battery Innovation Center. Considering that this was the catalyst which got the ball rolling the first time, if the Center’s independent testing confirms MULN’s initial results then MULN stock could be given a much needed jolt.
Using Unusual Whales option flow it’s clear that market sentiment is mixed. Call volume totaled 74% at close but bullish premiums were split almost evenly with bearish premiums: 49.4% to 50.5%. Going into close a few whales sold puts with $18 thousand and $13 thousand premiums. After hours activity was also more bullish for premiums above $3 thousand. However, its important to note that with MULN’s PPS near $1, investors are more likely to buy and sell shares rather than options.
MULN Stock & Esousa
However, one factor impacting the stock has been MULN’s securities purchase agreement with Esousa Holdings. In February, the company announced that it had received funding through a $30 million equity line from Esousa Holdings LLC and debt financing from existing shareholders. The terms of this agreement allows Esousa to purchase $30 million worth of shares at $.68 per share over 12 months. According to the agreement, Esousa is not able to own more than 9.9% of MULN’s shares. However, it does have the right to not only short MULN’s shares but to sell shares to its partners as well. In light of this agreement, some have speculated that Esousa is able to profit off of MULN’s shares using the difference between the discounted price and the market price.
In addition to this, the company has to issue shares to Esousa to cover its equity line of credit. This means if its price per share drops, MULN would be required to issue more shares. This is why MULN recently filed a S-3 form for the issuance of up to 228 million outstanding shares – with up to 30 million issuable to Esousa. According to MULN’s filing on March 1st, Esousa holds 18 million shares directly and 1.8 million shares through Ceocast Inc. The document also states that MULN’s OS is currently at 188 million shares which shows that MULN’s share structure has been impacted as a result and MULN’s higher than average trading volume could also be attributed to the larger pool of outstanding shares.
This is one reason why investors have speculated that Esousa is on track to takeover the company if it pushes the price per share low enough to delist MULN. It’s worth noting that Esousa Holdings LLC. and CEOCast also appear to be managed by the same Michael Wachs who was banned from the banking and brokerage industries after facing disciplinary action from the NASD in 1998. Needless to say, Esousa’s reputation is less than glowing.
Despite concerns regarding Esousa’s increasing position in MULN, the company has taken measures to prevent a possible takeover. While issuing the 228 million shares, the company included 11 million shares issued to CEO David Michery to ensure that the management’s percentage of ownership stays close to 76%. This has effectively thwarted any attempt at a takeover since it would require the company’s own management to sell its shares.
MULN Management
Thankfully, MULN’s CEO David Michery is in it for the long haul. Michery founded the company in 2014 as a successor company from the acquisition of CODA Automotive and Mullen Motor Cars. So far he has created 12 trademarks to develop the company’s brand and vision. Michery is also known for building several companies which were later valued at hundreds of millions – a bullish sign for Mullen which will be competing against EV manufacturers with notable resources. He has also made it a goal to keep the company’s manufacturing and operations entirely based in the USA. In this way, he is determined to have Mullen Technologies play a role in shaping a self-sustaining local economy. Michery recently shared that he is “proud of the incredible progress Mullen has made so far,” before adding that the company is just getting started.
MULN received a bit of a boost following a video interview on March 16th with Milton Todd Ault III – Executive Chairman and Founder of BitNile (NASDAQ: NILE). In the interview, Michery reviews Mullen’s history commenting that it was showcased by Microsoft and Cribs at its start. Building upon Mullen’s reputation for being at the “forefront of electrifying America”, Michery acquired CODA for its intellectual property with the goal of shaping the road ahead for electric vehicle manufacturing. Commenting on Tesla’s success in the interview, Michery clearly sees Mullen as a serious contender in the EV space.
In a recent interview with CarBuzz, Michery also showed great ambition for the company’s most anticipated EV – the Mullen FIVE – as well as its luxury model – the RS. Currently, the company plans to have a full working prototype of the RS this summer, and Michery has already shared that it will be “a quarter of a million-dollar vehicle that will compete with million-dollar vehicles”. With Michery at the helm of MULN, many shareholders are optimistic about MULN’s long-term potential in the EV space.
John Taylor Promotion
Bringing in fresh blood, MULN promoted John Taylor as its new senior vice-president of Global Manufacturing and Strategic Planning. With vast experience in the automotive industry, Taylor has overseen several plant start-ups as well as the launch of 12 vehicles in the US and globally.
Beginning his career at General Motors, Taylor served as launch manager, operations manager, and machine and equipment manager while contributing to 11 vehicle launches. Following his tenure at GM, Taylor joined Tesla – becoming one of the EV giant’s first 50 employees. At Tesla, Taylor led its advanced manufacturing engineering group and played a pivotal role in opening Tesla’s Fremont facility.
Moreover, Taylor was crucial in manufacturing the Tesla Model S as well as the architecture of Tesla’s future EVs. In light of this, Michery is bullish “John’s international manufacturing experience will come into play as he strategizes and evaluates Mullen’s other domestic and international manufacturing opportunities”.
Given Taylor’s vast experience in the EV industry, MULN is positioned to capitalize on his reputation and experience as it develops its manufacturing facility in Mississippi. In light of this personnel change, MULN appears to be on the right track since Taylor’s promotion could assist in the launch of the Mullen FIVE in 2024.
CarBuzz Interview
When the interview with CarBuzz was featured on March 14th, it clearly brought some new eyes to the company – causing the stock to rally 28.9%. It’s easy to see why, since CarBuzz shared with its over 9 million monthly visitors that “The Mullen Five is a luxury crossover in the fullest sense of the word luxury”. Carbuzz followed this glowing praise by saying that Mullen “will be joining Tesla, Rivian, and Lucid as real American competition to legacy automakers as the EV market grows.”
Carbuzz was quick to note that, for true car fans, Mullen offers all the elements of luxury that drivers could wish for. The model’s visual design is attributed to Andreas Thurner who was also responsible for the sleek interior of the 2009 Rolls-Royce Ghost. While Marian Petrelecan, an engineer who worked with BMW and Chrysler, is executing the schematics of this vision.
As is, the Mullen Five is expected to launch with a 95-kWh battery pack giving it 325 miles of range for a base price of $55,000. However, when announcing its battery technology at the end of February, Michery noted that “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.” Considering that the FIVE is intended to begin production in early 2024 with sales beginning at the end of the year, it’s uncertain when this technology will be put to use.
Meanwhile, Michery has put fiscal responsibility at the company’s core. MULN saved on initial costs by purchasing the facility from Green Tech Automotive early on. In addition to this, the facility is designed with scalability in mind which means if demand is higher than estimated, Mullen will be able to meet demand in relatively short order. Now, it has room to expand its facility and in preparation for the start of production MULN is planning to extend the assembly facility and add a body and paint shop on-site. Mullen has also partnered with several notable players such as hofer powertrain, Comau, ARRK, Dürr and DSA Systems. Together, these partnerships will play a “crucial role in bringing the FIVE to market with the latest technology and in least amount of time.”
Fortune 500 Company
During an appearance on Benzinga’s Listmaker EV event, Michery grabbed investors’ attention when he promised a major announcement in Q2 regarding a Fortune 500 company purchasing MULN’s cargo vans. Michery was bullish on the company’s potential and ensured investors that there will not be any delays in production – an issue many EV companies are facing due to supply chain woes.
Defense Production Act
Meanwhile, the global shortage in oil supply could lead President Biden to invoke the Defense Production Act to increase production of minerals for EV batteries. Under this order, EV manufacturers will gain access to government funding to improve their production capacity or perform studies on metals extraction projects. If Biden actually invokes this order, MULN would benefit due to its need for liquidity – possibly accelerating its solid-state polymer battery studies.
Hindenburg Short Report
At the start of April, MULN stock saw a slight dip in response to a short report from Hindenburg Research. The report titled “Mullen Automotive: Yet Another Fast Talking EV Hustle” highlights Michery’s past CEO roles at “nearly half a dozen failed penny stock companies, several of which had their securities registrations terminated or revoked by the SEC”. Later on, the report predicts that shares resulting from its dilutive capital “will likely become available for sale in a matter of weeks, which we expect will crush the stock”.
The lengthy report takes a jab at MULN’s solid state battery announcement as well as the company’s line of EV cargo vans which are reportedly rebranded from the Chinese manufacturer – Tenglong. While this is to be expected from a short-selling firm like Hindenburg Research, the most dangerous accusation appears to be that MULN misrepresented the test results regarding commercialization targets for its battery.
This has led many analysts to compare MULN to a developer of solid-state lithium metal batteries – Quantumscape (NYSE: QS) – which spent $151.5 million on R&D last year and over $263 million for its commercial application over the last three years. Whereas, MULN appears to have uncovered this technology with much lower R&D spending – leading some to question the legitimacy of its findings.
Battery Innovation Center
Following the negative sentiment on MULN stock due to Hindenburg’s short report, MULN agreed with the Battery Innovation Center (BIC) to perform further testing on its solid-state polymer battery. These tests aim to determine the capacity of the battery as well as its ability to provide constant discharge over different power levels emulating the applications of EVs. Already well-known for their testing reliability, Michery is bullish these tests will “certify our solid-state battery”. With the test results set to be released in May, bullish investors are confident the results will be similar to the previous testing in February. In light of this, MULN stock could run based on positive testing results.
With this in mind, MULN intends to begin producing EV battery packs at its high voltage battery R&D facility in Monrovia. Currently modifying the facility, MULN will produce EV batteries for all of its EV programs including the ONE EV Cargo Van, FIVE EV Crossover, and DragonFLY EV. By producing batteries at its own facility, MULN is expected to reduce its dependence on third-party suppliers and limit the risks associated with supply chain tightness. Moreover, MULN will significantly reduce its costs while increasing the efficiency of battery production. Given that MULN needs more liquidity for the production of its EVs, reducing its costs could be a bullish sign for the company’s financials.
ATVM Loan
On that note, MULN filed an ATVM loan application with the U.S. Department of Energy for its ONE EV Cargo Van Program. If MULN is granted this loan, MULN could accelerate development of its other programs with the $65 million the company expects to receive in Q2. It is worth mentioning that the AVTM program has provided manufacturers of light-duty vehicles with more than $8 billion since its inception.
Since the ONE EV is already competing with market leaders Ford Transit Connect and Ram Promaster City Cargo Van, its unknown whether MULN’s application for the loan will be approved. Considering that MULN has been pursuing this loan since 2019, the DOE has been following the company’s development over that period and if it receives approval then launching the FIVE in 2024 will be even more achievable for the company.
National Tour
Capitalizing on the country’s enthusiasm for EVs at the moment, MULN will start a six-week national test drive tour for its flagship car in October. During this tour, FIVE reservation holders will be able to test drive and experience the FIVE in person for the first time. At the same time, MULN added its advanced FIVE RS to the “Strikingly Different” U.S. test-drive tour which is planned for spring 2023. Given the high capabilities of the FIVE RS, customers will not be allowed to drive the car themselves. However, they will be able to ride alongside a professional IndyCar driver. As the launch of the FIVE and its variants draws closer, these efforts to showcase the car could increase reservations for MULN’s flagship car.
MULN Financials
However, many have pointed out that despite its recent positive momentum, MULN’s financial performance has been very poor. Looking at MULN’s Q4 report, the company reported $14 million in operating costs – an $11 million increase from the same period a year earlier. However, the higher costs were likely the result of the company’s research for its polymer battery as well as ramping up the production of its EV cargo vans which are set to launch in Q2. The company reported a $4.9 million net loss in Q4 of 2020, but by Q4 of 2021 that net loss had increased to $36.5 million. Clearly this should be a concern for investors given that MULN’s financial woes put it in a dangerous situation with Esousa – dragging the stock down and forcing the company to dilute its shareholders.
Yet, MULN’s management appears to be playing the long game with the goal of becoming profitable in 2026. The team is cognizant of the company’s position and as Petrelecan pointed out in the CarBuzz interview, they are very conservative in their finance model.
It’s worth noting that EV companies face significant upfront costs making the timeline to profitability a long one indeed. Tesla took 18 years to become profitable and the new EV on the block – Rivian – disappointed shareholders with poor Q4 earnings and delivery guidance. Even Lucid faced major setbacks before eventually being saved by the Saudi sovereign wealth fund’s significant investment. But despite its rough start, Tesla has become an EV powerhouse and Lucid is now delivering vehicles across the country.
ATVM Loan
The same optimism could be allowed for Mullen, and as some have noted, MULN did apply for a $450 million loan from the U.S. Department of Energy’s program. This program is designed to assist companies in the EV space with the goal of reducing petroleum use in vehicles and promoting domestic manufacturing. If the company is granted this funding, then MULN’s situation could change dramatically. However, the company will have a difficult time meeting the financial viability criteria for the program. According to the criteria, loan recipients must be “financially viable without the receipt of additional Federal funding associated with the proposed project.” This means that an applicant must demonstrate a “reasonable prospect that it will be able to make payments of principal and interest on the loan as and when such payments become due under the terms of the loan documents” and that the applicant “has a net present value which is positive, taking all costs, existing and future, into account.”
As part of the application, Mullen must “develop proposals that either establish to a high level of confidence that adequate future sales will occur, or that the consequences to DOE of sales under-performance have been mitigated”. To this end, MULN intends to submit the results of its 6-month EV market exploration study which Michery stated “will play a key role in our application with the U.S. Department of Energy’s AVTM program.”
However, the DOE has specified that “In all but the most extraordinary circumstances, market studies and non-binding customer reservations to purchase vehicles or components will not be sufficient to establish adequate future sales.”
All together this indicates the MULN may not be a recipient of the loan program, but its is important to note that as soon as April it will have data from the sale of its EV cargo vans. This commercial electric vehicle alternative is highly customizable and will be available in a single or dual electric motor configuration. Depending on the results of these sales, MULN could see a boost in its financials and potentially become a more attractive applicant for the AVTM program.
More than $65 Million Cash in Q2
The company hopes to improve its financial standing with over $65 million in cash and cash equivalents for Q2. This influx of cash will be important for propelling development of the Mullen EV Cargo Van line and the Mullen FIVE EV Crossover program. On this note, Michery shared that he believes “the Company’s balance sheet is the strongest it has ever been in our history”. In light of this, it appears MULN will be able to pay off its equity line from Esousa.
Technical Analysis
MULN is currently at $1.08 with a support at .88. It repeatedly tested its resistance at 1.38 last week with a secondary resistance at 1.58 and a third resistance near 1.94. Accumulation shows a steep drop since mid-way through April and the MACD is bearish. The RSI rebounded a little from overselling and currently sits at 33.
While MULN stock price has dropped significantly since the height of its squeeze, the ticker could see new volume come in ahead of its catalysts. Considering its beaten down PPS and low RSI, those bullish on its upcoming catalysts could use this opportunity for a swing hold in anticipation of its BIC battery testing results set to be released in May. Volume is currently lower than average – only reaching 42 million compared to its new average of 146 million.
However this could change given the recent update from MULN and BIC which shared that, “Battery Innovation Center has completed the cell preconditioning in preparation for cell performance cycling. This is a C/20 preconditioning format to establish cell capacity baseline. BIC will enter into high rate cycling as part of the performance-based cycling with those results forthcoming.”
This update – while not the final results of testing – could give MULN stock a push during pre-market trading and throughout the week.
MULN Forecast
In the long-term, MULN stock is likely one to watch as it has attracted the attention of car enthusiasts and investors alike. Given the number of awards won by the Mullen FIVE for its sleek design and features, its future release in 2024 could launch the company into the same sphere as other EV manufacturers. With a national test drive tour set to start in October, many investors are anticipating positive reviews and interest for MULN’s flagship car.
In the short-term, the rollout of its cargo vans will be an important catalyst to watch as MULN attempts to bolster its bottom-line to weather out the next few years. It will also provide a useful benchmark for evaluating what problems Mullen may face in the future rollout of the FIVE and its other models. In addition, the announcement that its EV Cargo Vans will be used by a Fortune 500 company is a bullish sign and once the name of this company is revealed – MULN stock could run.
This positive update from BIC and MULN confirms that the results of the solid-state battery tests will be delivered later this month – an important catalyst for many investors. With anticipation brewing over these results, MULN stock has the potential to soar if the results confirm MULN’s previous tests conducted in February.
Lastly, MULN’s decision to produce batteries at its in-house facility is also a major catalyst as the company will not have to rely on third-party suppliers. Given MULN’s current financial position, this could be a smart investment by the company and indicates MULN’s forward-looking perspective.
Fundamental Analysis
MULN first captured the spotlight for its short squeeze potential – a combination of high short interest, low float, and positive news. Currently the off-exchange short volume ratio is around 23.7% and short interest is around 14.03% – a sharp reduction from its short interest upon its battery announcement at the end of February.
Fundamentally, Mullen’s potential short squeeze is being fueled by its impressive solid state-battery technology. The company filed a number of trademarks for its EV battery technology in 2021 which is a sign that February’s announcement was a long time coming. It’s important to mention that if this technology proves feasible, Mullen would be able to offer a better driving range than both Tesla and Lucid. While the Mullen FIVE is not scheduled to roll out until 2024, the company’s CEO Michery noted that “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.”
This was the spark which made MULN one of the most active tickers on StockTwits and Reddit for several weeks. While some of the momentum has died out since February, MULN could be re-energized with the results of its battery testing which is currently being conducted by the Battery Innovation Center. Considering that this was the catalyst which got the ball rolling the first time, if the Center’s independent testing confirms MULN’s initial results then MULN stock could be given a much needed jolt.
Using Unusual Whales option flow it’s clear that market sentiment is mixed. Call volume totaled 74% at close but bullish premiums were split almost evenly with bearish premiums: 49.4% to 50.5%. Going into close a few whales sold puts with $18 thousand and $13 thousand premiums. After hours activity was also more bullish for premiums above $3 thousand. However, its important to note that with MULN’s PPS near $1, investors are more likely to buy and sell shares rather than options.
MULN Stock & Esousa
However, one factor impacting the stock has been MULN’s securities purchase agreement with Esousa Holdings. In February, the company announced that it had received funding through a $30 million equity line from Esousa Holdings LLC and debt financing from existing shareholders. The terms of this agreement allows Esousa to purchase $30 million worth of shares at $.68 per share over 12 months. According to the agreement, Esousa is not able to own more than 9.9% of MULN’s shares. However, it does have the right to not only short MULN’s shares but to sell shares to its partners as well. In light of this agreement, some have speculated that Esousa is able to profit off of MULN’s shares using the difference between the discounted price and the market price.
In addition to this, the company has to issue shares to Esousa to cover its equity line of credit. This means if its price per share drops, MULN would be required to issue more shares. This is why MULN recently filed a S-3 form for the issuance of up to 228 million outstanding shares – with up to 30 million issuable to Esousa. According to MULN’s filing on March 1st, Esousa holds 18 million shares directly and 1.8 million shares through Ceocast Inc. The document also states that MULN’s OS is currently at 188 million shares which shows that MULN’s share structure has been impacted as a result and MULN’s higher than average trading volume could also be attributed to the larger pool of outstanding shares.
This is one reason why investors have speculated that Esousa is on track to takeover the company if it pushes the price per share low enough to delist MULN. It’s worth noting that Esousa Holdings LLC. and CEOCast also appear to be managed by the same Michael Wachs who was banned from the banking and brokerage industries after facing disciplinary action from the NASD in 1998. Needless to say, Esousa’s reputation is less than glowing.
Despite concerns regarding Esousa’s increasing position in MULN, the company has taken measures to prevent a possible takeover. While issuing the 228 million shares, the company included 11 million shares issued to CEO David Michery to ensure that the management’s percentage of ownership stays close to 76%. This has effectively thwarted any attempt at a takeover since it would require the company’s own management to sell its shares.
MULN Management
Thankfully, MULN’s CEO David Michery is in it for the long haul. Michery founded the company in 2014 as a successor company from the acquisition of CODA Automotive and Mullen Motor Cars. So far he has created 12 trademarks to develop the company’s brand and vision. Michery is also known for building several companies which were later valued at hundreds of millions – a bullish sign for Mullen which will be competing against EV manufacturers with notable resources. He has also made it a goal to keep the company’s manufacturing and operations entirely based in the USA. In this way, he is determined to have Mullen Technologies play a role in shaping a self-sustaining local economy. Michery recently shared that he is “proud of the incredible progress Mullen has made so far,” before adding that the company is just getting started.
MULN received a bit of a boost following a video interview on March 16th with Milton Todd Ault III – Executive Chairman and Founder of BitNile (NASDAQ: NILE). In the interview, Michery reviews Mullen’s history commenting that it was showcased by Microsoft and Cribs at its start. Building upon Mullen’s reputation for being at the “forefront of electrifying America”, Michery acquired CODA for its intellectual property with the goal of shaping the road ahead for electric vehicle manufacturing. Commenting on Tesla’s success in the interview, Michery clearly sees Mullen as a serious contender in the EV space.
In a recent interview with CarBuzz, Michery also showed great ambition for the company’s most anticipated EV – the Mullen FIVE – as well as its luxury model – the RS. Currently, the company plans to have a full working prototype of the RS this summer, and Michery has already shared that it will be “a quarter of a million-dollar vehicle that will compete with million-dollar vehicles”. With Michery at the helm of MULN, many shareholders are optimistic about MULN’s long-term potential in the EV space.
John Taylor Promotion
Bringing in fresh blood, MULN promoted John Taylor as its new senior vice-president of Global Manufacturing and Strategic Planning. With vast experience in the automotive industry, Taylor has overseen several plant start-ups as well as the launch of 12 vehicles in the US and globally.
Beginning his career at General Motors, Taylor served as launch manager, operations manager, and machine and equipment manager while contributing to 11 vehicle launches. Following his tenure at GM, Taylor joined Tesla – becoming one of the EV giant’s first 50 employees. At Tesla, Taylor led its advanced manufacturing engineering group and played a pivotal role in opening Tesla’s Fremont facility.
Moreover, Taylor was crucial in manufacturing the Tesla Model S as well as the architecture of Tesla’s future EVs. In light of this, Michery is bullish “John’s international manufacturing experience will come into play as he strategizes and evaluates Mullen’s other domestic and international manufacturing opportunities”.
Given Taylor’s vast experience in the EV industry, MULN is positioned to capitalize on his reputation and experience as it develops its manufacturing facility in Mississippi. In light of this personnel change, MULN appears to be on the right track since Taylor’s promotion could assist in the launch of the Mullen FIVE in 2024.
CarBuzz Interview
When the interview with CarBuzz was featured on March 14th, it clearly brought some new eyes to the company – causing the stock to rally 28.9%. It’s easy to see why, since CarBuzz shared with its over 9 million monthly visitors that “The Mullen Five is a luxury crossover in the fullest sense of the word luxury”. Carbuzz followed this glowing praise by saying that Mullen “will be joining Tesla, Rivian, and Lucid as real American competition to legacy automakers as the EV market grows.”
Carbuzz was quick to note that, for true car fans, Mullen offers all the elements of luxury that drivers could wish for. The model’s visual design is attributed to Andreas Thurner who was also responsible for the sleek interior of the 2009 Rolls-Royce Ghost. While Marian Petrelecan, an engineer who worked with BMW and Chrysler, is executing the schematics of this vision.
As is, the Mullen Five is expected to launch with a 95-kWh battery pack giving it 325 miles of range for a base price of $55,000. However, when announcing its battery technology at the end of February, Michery noted that “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.” Considering that the FIVE is intended to begin production in early 2024 with sales beginning at the end of the year, it’s uncertain when this technology will be put to use.
Meanwhile, Michery has put fiscal responsibility at the company’s core. MULN saved on initial costs by purchasing the facility from Green Tech Automotive early on. In addition to this, the facility is designed with scalability in mind which means if demand is higher than estimated, Mullen will be able to meet demand in relatively short order. Now, it has room to expand its facility and in preparation for the start of production MULN is planning to extend the assembly facility and add a body and paint shop on-site. Mullen has also partnered with several notable players such as hofer powertrain, Comau, ARRK, Dürr and DSA Systems. Together, these partnerships will play a “crucial role in bringing the FIVE to market with the latest technology and in least amount of time.”
Fortune 500 Company
During an appearance on Benzinga’s Listmaker EV event, Michery grabbed investors’ attention when he promised a major announcement in Q2 regarding a Fortune 500 company purchasing MULN’s cargo vans. Michery was bullish on the company’s potential and ensured investors that there will not be any delays in production – an issue many EV companies are facing due to supply chain woes.
Defense Production Act
Meanwhile, the global shortage in oil supply could lead President Biden to invoke the Defense Production Act to increase production of minerals for EV batteries. Under this order, EV manufacturers will gain access to government funding to improve their production capacity or perform studies on metals extraction projects. If Biden actually invokes this order, MULN would benefit due to its need for liquidity – possibly accelerating its solid-state polymer battery studies.
Hindenburg Short Report
At the start of April, MULN stock saw a slight dip in response to a short report from Hindenburg Research. The report titled “Mullen Automotive: Yet Another Fast Talking EV Hustle” highlights Michery’s past CEO roles at “nearly half a dozen failed penny stock companies, several of which had their securities registrations terminated or revoked by the SEC”. Later on, the report predicts that shares resulting from its dilutive capital “will likely become available for sale in a matter of weeks, which we expect will crush the stock”.
The lengthy report takes a jab at MULN’s solid state battery announcement as well as the company’s line of EV cargo vans which are reportedly rebranded from the Chinese manufacturer – Tenglong. While this is to be expected from a short-selling firm like Hindenburg Research, the most dangerous accusation appears to be that MULN misrepresented the test results regarding commercialization targets for its battery.
This has led many analysts to compare MULN to a developer of solid-state lithium metal batteries – Quantumscape (NYSE: QS) – which spent $151.5 million on R&D last year and over $263 million for its commercial application over the last three years. Whereas, MULN appears to have uncovered this technology with much lower R&D spending – leading some to question the legitimacy of its findings.
Battery Innovation Center
Following the negative sentiment on MULN stock due to Hindenburg’s short report, MULN agreed with the Battery Innovation Center (BIC) to perform further testing on its solid-state polymer battery. These tests aim to determine the capacity of the battery as well as its ability to provide constant discharge over different power levels emulating the applications of EVs. Already well-known for their testing reliability, Michery is bullish these tests will “certify our solid-state battery”. With the test results set to be released in May, bullish investors are confident the results will be similar to the previous testing in February. In light of this, MULN stock could run based on positive testing results.
With this in mind, MULN intends to begin producing EV battery packs at its high voltage battery R&D facility in Monrovia. Currently modifying the facility, MULN will produce EV batteries for all of its EV programs including the ONE EV Cargo Van, FIVE EV Crossover, and DragonFLY EV. By producing batteries at its own facility, MULN is expected to reduce its dependence on third-party suppliers and limit the risks associated with supply chain tightness. Moreover, MULN will significantly reduce its costs while increasing the efficiency of battery production. Given that MULN needs more liquidity for the production of its EVs, reducing its costs could be a bullish sign for the company’s financials.
ATVM Loan
On that note, MULN filed an ATVM loan application with the U.S. Department of Energy for its ONE EV Cargo Van Program. If MULN is granted this loan, MULN could accelerate development of its other programs with the $65 million the company expects to receive in Q2. It is worth mentioning that the AVTM program has provided manufacturers of light-duty vehicles with more than $8 billion since its inception.
Since the ONE EV is already competing with market leaders Ford Transit Connect and Ram Promaster City Cargo Van, its unknown whether MULN’s application for the loan will be approved. Considering that MULN has been pursuing this loan since 2019, the DOE has been following the company’s development over that period and if it receives approval then launching the FIVE in 2024 will be even more achievable for the company.
National Tour
Capitalizing on the country’s enthusiasm for EVs at the moment, MULN will start a six-week national test drive tour for its flagship car in October. During this tour, FIVE reservation holders will be able to test drive and experience the FIVE in person for the first time. At the same time, MULN added its advanced FIVE RS to the “Strikingly Different” U.S. test-drive tour which is planned for spring 2023. Given the high capabilities of the FIVE RS, customers will not be allowed to drive the car themselves. However, they will be able to ride alongside a professional IndyCar driver. As the launch of the FIVE and its variants draws closer, these efforts to showcase the car could increase reservations for MULN’s flagship car.
MULN Financials
However, many have pointed out that despite its recent positive momentum, MULN’s financial performance has been very poor. Looking at MULN’s Q4 report, the company reported $14 million in operating costs – an $11 million increase from the same period a year earlier. However, the higher costs were likely the result of the company’s research for its polymer battery as well as ramping up the production of its EV cargo vans which are set to launch in Q2. The company reported a $4.9 million net loss in Q4 of 2020, but by Q4 of 2021 that net loss had increased to $36.5 million. Clearly this should be a concern for investors given that MULN’s financial woes put it in a dangerous situation with Esousa – dragging the stock down and forcing the company to dilute its shareholders.
Yet, MULN’s management appears to be playing the long game with the goal of becoming profitable in 2026. The team is cognizant of the company’s position and as Petrelecan pointed out in the CarBuzz interview, they are very conservative in their finance model.
It’s worth noting that EV companies face significant upfront costs making the timeline to profitability a long one indeed. Tesla took 18 years to become profitable and the new EV on the block – Rivian – disappointed shareholders with poor Q4 earnings and delivery guidance. Even Lucid faced major setbacks before eventually being saved by the Saudi sovereign wealth fund’s significant investment. But despite its rough start, Tesla has become an EV powerhouse and Lucid is now delivering vehicles across the country.
ATVM Loan
The same optimism could be allowed for Mullen, and as some have noted, MULN did apply for a $450 million loan from the U.S. Department of Energy’s program. This program is designed to assist companies in the EV space with the goal of reducing petroleum use in vehicles and promoting domestic manufacturing. If the company is granted this funding, then MULN’s situation could change dramatically. However, the company will have a difficult time meeting the financial viability criteria for the program. According to the criteria, loan recipients must be “financially viable without the receipt of additional Federal funding associated with the proposed project.” This means that an applicant must demonstrate a “reasonable prospect that it will be able to make payments of principal and interest on the loan as and when such payments become due under the terms of the loan documents” and that the applicant “has a net present value which is positive, taking all costs, existing and future, into account.”
As part of the application, Mullen must “develop proposals that either establish to a high level of confidence that adequate future sales will occur, or that the consequences to DOE of sales under-performance have been mitigated”. To this end, MULN intends to submit the results of its 6-month EV market exploration study which Michery stated “will play a key role in our application with the U.S. Department of Energy’s AVTM program.”
However, the DOE has specified that “In all but the most extraordinary circumstances, market studies and non-binding customer reservations to purchase vehicles or components will not be sufficient to establish adequate future sales.”
All together this indicates the MULN may not be a recipient of the loan program, but its is important to note that as soon as April it will have data from the sale of its EV cargo vans. This commercial electric vehicle alternative is highly customizable and will be available in a single or dual electric motor configuration. Depending on the results of these sales, MULN could see a boost in its financials and potentially become a more attractive applicant for the AVTM program.
More than $65 Million Cash in Q2
The company hopes to improve its financial standing with over $65 million in cash and cash equivalents for Q2. This influx of cash will be important for propelling development of the Mullen EV Cargo Van line and the Mullen FIVE EV Crossover program. On this note, Michery shared that he believes “the Company’s balance sheet is the strongest it has ever been in our history”. In light of this, it appears MULN will be able to pay off its equity line from Esousa.
Technical Analysis
MULN is currently at $1.08 with a support at .88. It repeatedly tested its resistance at 1.38 last week with a secondary resistance at 1.58 and a third resistance near 1.94. Accumulation shows a steep drop since mid-way through April and the MACD is bearish. The RSI rebounded a little from overselling and currently sits at 33.
While MULN stock price has dropped significantly since the height of its squeeze, the ticker could see new volume come in ahead of its catalysts. Considering its beaten down PPS and low RSI, those bullish on its upcoming catalysts could use this opportunity for a swing hold in anticipation of its BIC battery testing results set to be released in May. Volume is currently lower than average – only reaching 42 million compared to its new average of 146 million.
However this could change given the recent update from MULN and BIC which shared that, “Battery Innovation Center has completed the cell preconditioning in preparation for cell performance cycling. This is a C/20 preconditioning format to establish cell capacity baseline. BIC will enter into high rate cycling as part of the performance-based cycling with those results forthcoming.”
This update – while not the final results of testing – could give MULN stock a push during pre-market trading and throughout the week.
MULN Forecast
In the long-term, MULN stock is likely one to watch as it has attracted the attention of car enthusiasts and investors alike. Given the number of awards won by the Mullen FIVE for its sleek design and features, its future release in 2024 could launch the company into the same sphere as other EV manufacturers. With a national test drive tour set to start in October, many investors are anticipating positive reviews and interest for MULN’s flagship car.
In the short-term, the rollout of its cargo vans will be an important catalyst to watch as MULN attempts to bolster its bottom-line to weather out the next few years. It will also provide a useful benchmark for evaluating what problems Mullen may face in the future rollout of the FIVE and its other models. In addition, the announcement that its EV Cargo Vans will be used by a Fortune 500 company is a bullish sign and once the name of this company is revealed – MULN stock could run.
This positive update from BIC and MULN confirms that the results of the solid-state battery tests will be delivered later this month – an important catalyst for many investors. With anticipation brewing over these results, MULN stock has the potential to soar if the results confirm MULN’s previous tests conducted in February.
Lastly, MULN’s decision to produce batteries at its in-house facility is also a major catalyst as the company will not have to rely on third-party suppliers. Given MULN’s current financial position, this could be a smart investment by the company and indicates MULN’s forward-looking perspective.
Declinazione di responsabilità
Le informazioni ed i contenuti pubblicati non costituiscono in alcun modo una sollecitazione ad investire o ad operare nei mercati finanziari. Non sono inoltre fornite o supportate da TradingView. Maggiori dettagli nelle Condizioni d'uso.