Mullen Automotive (MULN) has failed to generate positive investor sentiment despite its latest bids and acquisitions, as is evident from its almost 94% decline this year. Moreover, the stock has hit its 52-week low of $0.32 in the last session. Also, considering the macroeconomic headwinds, will MULN be able to gain momentum anytime soon? Let’s find out….
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Mullen Automotive, Inc. (MULN) manufactures and distributes electric vehicles (EVs). It also operates CarHub, a digital platform that leverages AI to offer an interactive solution for buying, selling, and owning a car.
On September 21, 2022, MULN made a $92 million bid for automaker Electric Last Mile Solutions, which filed for bankruptcy in June 2022. Also, MULN completed its majority acquisition of Bollinger Motors, Inc this month.
David Michery, CEO and chairman of Mullen Automotive, said, “All cash and stock required to close the Bollinger transaction on Sept. 7, 2022, has been funded or placed in escrow as required by the transaction documents. We are excited about the opportunities this acquisition brings and look forward to updating our shareholders with the positive outcomes resulting from this transaction.”
However, MULN has lost 47.8% over the past month to close the last trading session at $0.33. It has lost 93.7% year-to-date and 96.4% over the past year. The stock hit its 52-week low of $0.32 in its previous trading session.
Here’s what could shape MULN’s performance in the near term:
Third Consecutive 75-bps Rate Hike
On September 21, 2022, the Fed announced its third consecutive 75-bps rate hike. Moreover, Fed Chairman Jerome Powell claimed, “The Federal Open Market Committee (FOMC) is strongly resolved to bring inflation down to 2%, and we will keep at it until the job is done.”
The persistently high inflation and the Fed’s quest to tame inflation might weigh down on vehicle demand and thus affect MULN’s sales.
Weak Financials
For the second quarter ended June 30, 2022, MULN’s general and administrative expenses came in at $10.90 million, up 121.2% year-over-year. Its loss from operations came in at $18.22 million, up 184.5% year-over-year, while its net loss came in at $59.47 million, up 289.9% year-over-year.
Poor Profitability Ratios
MULN’s trailing-12-month ROTC and ROTA of negative 618.14% and 169.94% compare with the industry averages of 6.91% and 5.09%, respectively.
POWR Ratings Reflect Bleak Prospects
MULN has an overall rating of F, equating to Strong Sell in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
MULN has a D grade for Quality, consistent with its lower-than-industry profitability ratios.
In addition, it has an F grade for Value. Its trailing-12-month Price/Book of 8.65x is 362.4% higher than the industry average of 1.87x.
In the 65-stock Auto & Vehicle Manufacturers industry, MULN is ranked #57. The industry is rated D.
Click here for the additional POWR Ratings for MULN (Growth, Momentum, Stability, and Sentiment).
View all the top stocks in the Auto & Vehicle Manufacturers industry here.
Bottom Line
MULN is trading below its 50-day moving average of $0.73 and its 200-day moving average of $1.92. Moreover, it had hit its low in the last session, indicating bearish sentiments around the stock. And given its poor profitability, I think MULN might be best avoided now.
How Does Mullen Automotive, Inc. (MULN) Stack Up Against its Peers?
While MULN has an overall POWR Rating of F, one might consider looking at its industry peers, Stellantis N.V. (STLA), Volkswagen AG (VWAGY), and Subaru Corporation (FUJHY), which have an overall A (Strong Buy) rating, and Honda Motor Co., Ltd. (HMC), which has an overall B (Buy) rating.
MULN shares were trading at $0.33 per share on Wednesday morning, down $0.01 (-1.75%). Year-to-date, MULN has declined -93.69%, versus a -22.69% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master’s degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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