MULN Stock a Contrarian Play in a Crowded Field

Inflation, rising interest rates, and a looming recession are leading many stock investors to run for the hills. The Nasdaq is firmly entrenched in bear-market territory, the S&P 500 is back in a bear market, and the Dow Jones Industrial Average is flirting with a bear market.

Some of the stock sell-offs have been warranted; some haven't. One promising electric vehicle (EV) stock that has recently taken a pummeling is Mullen Automotive Inc (NASDAQ:MULN).

Mullen Automotive is a company that owns and partners with businesses to build EVs. Mullen is also the company behind "CarHub," a digital platform for buying, selling, and owning cars. (Source: “About,” Mullen Automotive Inc, last accessed October 6, 2022.)

The company’s upcoming first crossover EV, the "Mullen FIVE," will feature performance specs such as 325 miles of driving range, acceleration of zero to 60 miles per hour (mph) in 3.2 seconds, and a top speed of 155 mph.

Mullen Automotive Inc will be taking the first fully functional demonstration models of Mullen FIVE on a national tour starting at the end of this month. The company is slated to start delivering the vehicles to customers in 2024.

The "Mullen FIVE RS" high-performance version will go from zero to 60 mph in 1.95 seconds and have a top speed above 200 mph. The FIVE RS will join the second leg of the company's national tour in spring 2023.

Mullen Automotive Inc is also developing the "Mullen DragonFLY," a high-performance electric sports car.

The company only went public on November 5, 2021. Suffice it to say, it hasn’t been an easy ride. The company opened trading at $12.99 and, for the most part, it’s been downhill since then.

Currently trading at $0.34, Mullen Automotive stock has lost more than 97% of its original value. It has traded below $1.00 for 30 consecutive days, which means it doesn't meet the requirements to be listed on the Nasdaq. Mullen Automotive Inc could be delisted if its shares don't trade above $1.00 for 10 consecutive business days by March 6, 2023.

There are more than enough compelling reasons to believe that MULN stock will be in compliance with the Nasdaq's trading rules by then.

Moreover, the one analyst who follows Mullen Automotive stock is bullish on the company, with a 12-month price target of $23.00. If MULN stock hits that target, it will generate an eyewatering return of 6,471%.

Recent Business Deals

In July, Mullen Automotive announced that it had signed a binding agreement with DelPack Logistics LLC, an Amazon Delivery Service Partner company, to purchase up to 600 "Class 2 Mullen One" electric cargo vans over the next 18 months. (Source: “Mullen Automotive Signs Binding Agreement With DelPack Logistics, LLC, an Amazon Delivery Services Partner, for Class 1 & 2 EV Cargo Vans,” Mullen Automotive Inc, July 11, 2022.)

Mullen Automotive could deliver the first 300 vans to DelPack Logistics by November 30.

In early September, Mullen Automotive announced that it took a 60% controlling interest in EV truck maker Bollinger Motors Inc. for $148.2 million. (Source: “Mullen Automotive Acquires Controlling Interest in EV Truck Innovator Bollinger Motors, Inc.” Mullen Automotive Inc, September 8, 2022.)

This is Mullen Automotive's first acquisition of another EV company. The deal immediately puts class 3 to 6 medium-duty trucks plus "B1" and "B2" sports utility trucks into Mullen's product line. The acquisition brings in nearly 50,000 reservations for B1 and B2 trucks.

David Michery, Mullen Automotive Inc's CEO and chairman, noted, “Combining Bollinger’s vehicles with our existing class 1 and class 2 EV cargo van programs gives us the chance to dominate the entire class 1-6 commercial light and medium duty truck segments.” (Source: Ibid.)

He continued, “In addition, Bollinger will be able to leverage Mullen’s solid-state battery technology, making their current vehicles even more competitive as our technology launches across the total portfolio of EVs from both Mullen and Bollinger.”

It didn’t take long for Mullen Automotive Inc's acquisition of Bollinger Motors Inc to bear fruit.

On September 21, Bollinger Motors announced it had teamed up with Wabash National Corporation (NYSE:WNC), a leading truck body and trailer manufacturer, to develop a stronger, lighter, refrigerated truck body on an electric chassis. (Source: "Bollinger Motors and Wabash Announce Joint Development to Produce Last-Mile Refrigerated Delivery Electric Truck," Mullen Automotive Inc, September 21, 2022.)

Mullen Automotive Inc Reports Its Best Balance Sheet Ever

Mullen Automotive is, for the most part, a development-stage company, but it’s quickly moving to the production stage—and it has the cash to get it there.

In August, the company announced its preliminary third-quarter results, which included a strong financial position, with approximately $99.0 million in cash and cash equivalents. The company has just $11.0 million in debt. (Source: “Mullen Automotive Announces Preliminary Third Quarter Results,” Mullen Automotive Inc, August 9, 2022.)

Other highlights in Mullen Automotive's preliminary third-quarter report include:

• Asset growth of 391%
• Positive working capital of $27.6 million
• $318.0 million in financial commitments
• 77% reduction in debt
• 281% increase in research and development spending
• Advanced solid-state battery technology moving to the pack level and a continuation of the build-up of battery assembly operations
• Expansion of the company's presence in the Midwest, with the addition of a Detroit EV technology team that's focused on technologies for electric commercial vans
• Updates to the "Class 1" cargo van with a larger optional battery pack that can extend driving range to 200 miles
• A provisional patent application for "PERSONA" technology, which includes facial recognition and vehicle personalization for Mullen FIVE vehicles

Michery commented, “It’s an exciting and pivotal time for Mullen as we continue to experience exceptional growth. We’ve been focused on expanding our capital positions, resources, and efforts in all key business areas, and we are really seeing it come together with our recent expansions and successes.” (Source: Ibid.)

Analyst Take

Mullen Automotive stock is a beaten-down, under-the-radar EV stock with tremendous long-term growth potential.

As mentioned above, Mullen Automotive Inc acquired a majority ownership stake in Bollinger Motors, signed an agreement to provide 600 EV cargo vans to DelPack Logistics, announced a partnership with Wabash, and will start delivering its own EVs in 2024.

There are many transformational things going on at Mullen Automotive, and they're definitely not reflected in its current share price. This means MULN stock could end up soaring.