Mullen Automotive (NASDAQ: MULN) is an formidable startup in a market that’s rising and receiving authorities assist. It’s additionally a aggressive discipline, although, and Mullen has to show its viability as a enterprise enterprise. Nonetheless, I’m bullish on Mullen Automotive inventory as the corporate has a relentless drive to increase its market footprint within the U.S. and internationally.
Mullen Automotive is an electrical car (EV) producer that’s primarily based in California. Some EV makers deal with producing handsome automobiles, whereas others attempt to construct highly effective ones; Mullen manages to realize each on the identical time.
As we’ll uncover, Mullen Automotive inventory is for merchants who’re on board with the corporate’s formidable imaginative and prescient and don’t thoughts the dangers concerned. For audacious EV-market traders, then, Mullen has the makings of a doable 2x, 5x, and even 10x return on funding – however let’s downshift our gears for a second and first think about the obstacles alongside the trail to potential positive factors.
Mullen Automotive is Unprofitable and Has Debt
In the event you’re on the lookout for a “regular Eddie” sort of funding, Mullen inventory isn’t it. Mullen Automotive isn’t a worthwhile enterprise, and the corporate has a good quantity of debt. However, Mullen does seem like taking motion to pay down its debt.
It’s not completely uncommon for an EV startup to be unprofitable for some time. Nonetheless, Mullen Automotive would possibly alarm some cautious traders as the corporate has trailing-12-month earnings per share (EPS) totaling -$4.96. That’s not an encouraging statistic when the inventory value is beneath $0.30.
Some people additionally would possibly discover it off-putting that Mullen Automotive inventory was a $5 inventory in the beginning of 2022 however is now beneath $0.30. In case your credo is “The development is your good friend,” then frankly, MULN inventory in all probability isn’t best for you.
Lastly, it’s essential to think about Mullen Automotive’s debt. There’s truly excellent news on this entrance, although, as Mullen has managed to cut back its estimated debt burden from over $30 million final 12 months to lower than $10 million at present. Simply possibly, Mullen Automotive can develop into debt-free sometime, and this might make the corporate extra financially viable.
Mullen Automotive is Pushing Aggressively into A number of Markets
In the event you’re basing your trades on what an organization has achieved financially, then you definitely may not be significantly impressed with Mullen Automotive. The longer term might look a complete lot brighter than the previous, although, as Mullen is proactive in making its presence identified domestically and overseas.
For instance, Mullen launched into its “Strikingly Totally different” tour in late October, with the itinerary spanning notable locations resembling Los Angeles, Las Vegas, Dallas, Miami, Houston, and Atlanta. Chairman and CEO David Michery noticed early curiosity in Mullen’s FIVE EV Crossover car mannequin, saying it was “very gratifying to see the FIVE reservations pour in and the tour slots replenish in a matter of minutes.”
Just some days into the tour, Mullen reported optimistic suggestions in regards to the firm’s car choices. Members at Pasadena, California’s “Strikingly Totally different” tour cease have been apparently impressed with the Mullen FIVE’s infotainment system, which featured PERSONA, Mullen’s proprietary Private Automobile Assistant expertise. The press launch touted PERSONA’s facial recognition expertise, which is “designed to supply each driver with a extremely customized expertise within the Mullen FIVE.”
By the way in which, Mullen Automotive isn’t confining its advertising and marketing outreach to U.S. borders. Actually, the corporate not too long ago introduced that its compact city supply electrical car, the I-GO, is licensed and prepared on the market in Germany, Spain, France, the UK, and Eire. If all goes in keeping with plan, the primary I-GO fashions shall be delivered in Germany in December of this 12 months.
Now, you may be considering that inflation is even worse in Europe than it’s within the U.S. proper now. That’s a sound concern, however Mullen Automotive assured that the I-GO “could have a beginning value of $11,999 plus VAT and native transportation.” So, it shouldn’t be unaffordable even throughout this time of elevated client costs within the EU.
Conclusion: Ought to You Take into account Mullen Automotive Inventory?
What’s extra essential, previous efficiency or future prospects? As a potential investor, you’ll have to do some self-reflection and think about whether or not you’re prepared to disregard Mullen Automotive’s present lack of profitability and envision a profitable foray into America, Europe, and wherever else EVs could also be offered sometime.
Within the last evaluation, MULN inventory represents a speculative wager in a tricky market. Clearly, Mullen Automotive is of the “get wealthy or die making an attempt” mentality, and when you’re daring sufficient to get on board – with the caveat that each one place sizes ought to be very small – you simply might need an enormous EV-market winner in your palms.
