Mullen Automotive (NASDAQ: MULN) is one of those small EV companies that struggle to get the attention it deserves. With headline space a valued commodity, expect to see the industry behemoths like Tesla (NASDAQ: TSLA), General Motors (NYSE: GM), and others getting the spotlight. Still, just because a micro-version of those sector giants isn't earning the front page or cover doesn't mean they aren't performing at a high level. Many are, and MULN is a perfect example.
And they make their own case. Over the past month, at least four updates electrified the investor community into opening new or adding to MULN positions. That interest sent shares soaring by over 177% from October lows. While market gravity helped pull part of that surge lower, share price declines in MULN is an opportunity at this stage of the game, not a sign of internal weakness.
That's because, from a fundamental and operational perspective, MULN is starting to hit its stride using all cylinders. In fact, its potentially transformative acquisition of new assets, significant decrease in debt, exclusive licensing to market the I-GO last-mile EV in European markets, and robust interest and demand for its FIVE EV Crossover put MULN in its best position ever to create sustainable shareholder value.
An Impressive String Of Performace
There's was already plenty to support that bullish sentiment. And more was added last week when MULN announced eliminating $13 million in company debt, a reduction leaving them with less than $10 million in debt on the books. That's a sharp decline from the $30 million indebtedness in 2021. But more than just a 66% reduction in outstanding debt, the better news is that MULN could soon be a debt-free company. If they can stay true to that mission, that could feasibly happen by the end of next year or sooner. For an emerging EV sector player with several products hitting the pavement and development programs in the late stages, it's a distinction that does more than attract investor interest; it could also send short sellers for cover.
Even if some hang around, they may not want to for long. The positive updates announced over the past few weeks should positively affect income going forward. And with a well-managed and ambitious company starting to do all the right things at the right time, more than just accruing new revenues, they can harness the value inherent to recent deals. All tolled, MULN could transform into an even more impressive EV sector player.
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Getting Bigger Faster With I-GO
By the way, that's happening. While absent from its share price value, there's plenty of intrinsic value already in the MULN portfolio. A deal made last month added considerably to it. In October, MULN closed a deal acquiring what could be a game-changing asset for the company. Investors appeared to appreciate the news; they sent shares higher by over 77% after MULN announced acquiring exclusive sales and marketing rights to sell the I-GO in particular European markets. Considering that the I-GO is described as a "perfect" electric vehicle for urban European markets, and knowing that the MULN team is capable of tapping into its value, the impressive move higher could still be leaving value on the table, especially with the I-GO expected to fill a substantial niche last-mile services opportunity in those markets. From a size and logistics perspective, it certainly meets market needs.
It boasts a short but powerful 96-inch wheelbase, 16.5-kWh battery pack, rear-wheel drive, and a curb weight of only 1,753 lbs. Add with its NEDC estimated range of 124 miles per charge and its ability to easily handle the stop/go and weave in/out typical of narrow European urban streets, it's already jumping in the polls as a favored vehicle choice for both last-mile delivery companies and consumers wanting convenience and value. That's no surprise. The I-GO was specifically built to meet known market needs, designed to get to the customer's door faster and provide affordable in-town EV options while decreasing pollution and congestion levels across Europe.
It's attractively priced, too. The I-GO will have a starting price of only $11,999 plus taxes and fees and will be retailed and serviced through supporting local European distributors. Investors in MULN should appreciate the value this deal can deliver. Short sellers, not so much. They may even be willing to admit that the acquisition is a significant win for MULN, an inducement to cover positions. Thus while shorts are getting a reprieve from news of monetary policy change, or lack of it, the weakness in MULN shares certainly can't be attributed to a lack of business performance. Hence, this decline could be short-lived.
Earning Industry And Consumer Accolades
And remember that there's plenty more supporting MULN's bullish case. In addition to I-GO providing MULN with massive new revenue-generating opportunities, it also extends its brand into other countries while simultaneously allowing them to remain focused on its mission of manufacturing its lineup of impressive EVs in the USA. Those include MULN's current commercial vehicle lineup comprised of Class 1 and 2 EV cargo vans, Class 3 through Class 6 vehicles resulting from its majority acquisition of Bollinger Motors, and its Mullen FIVE series.
Incidentally, in addition to securing the exclusive sales, distribution, and branding rights for the I-GO in Spain, France, Germany, the UK, and Ireland, MULN said it also entered into an Asset Purchase Agreement to acquire all assets of Electric Last Mile Solutions, Inc. and Electric Last Mile, Inc. ("ELMS") from the ELMS Bankruptcy Estates. That deal can also, in short order, considerably extend MULN's marketing and sales reach. If so, it will be the start of transforming milestones reached into catalysts. And with MULN scoring several in the past month alone, the company could be positioned for a breakout.
Near And Long-Term Market Opportunities
That's likely. From just those few updates made in October, MULN went from a medium to long-term play to a near-term and compelling value proposition. And despite its recent increase, MULN shares still look appreciably disconnected from an appropriate valuation. But that's not altogether bad news; valuation disconnects expose investment opportunities, and this is one that investors may want to seize.
While there are now a few smallcap EV companies to choose from, others don't seem to hold the revenue-generating firepower inherent to MULN. Nor have others created an end-to-end ecosystem making "going electric" more accessible than ever. And considering that millions of private-sector companies and public-sector consumers want the types of products Mullen sells and plans to sell, and fortified with an overseas presence, MULN also looks better positioned from a market perspective to monetize its initiatives sooner than its peers. Again, no surprise there if it happens.
Its products are different, and that's generating a lot of interest. Its Mullen FIVE EV product family is "strikingly different" and is a welcomed addition to the premium midsized electric-powered sport utility vehicle market. But it has more than great looks. In addition to what's been described as "stunningly designed and engineered," it's manufactured entirely in the USA. But that's only part of its appeal.
Its timeless design and intuitive functionality also showcase power, going from zero to sixty in 3.2 seconds, positioning it at or near the top of many categories compared to competing vehicles' styles and performance. But there's still more to help put the FIVE into a class of its own. It's also equipped with modern advancements like facial recognition technology, an integrated LED lighting system, voice command, and PERSONA, a personal vehicle assistant controlled via app managing preferences and security modes.
That's led to consumer opinions overwhelmingly supportive of the car, placing it among the best in the space and earning competitive respect against Ford's (NYSE: F) Mach E/F, General Motors EVs, the Toyota bZ4X and the Tesla Model Y. Those wanting to see it in action won't wait long. The first fully functional demonstrator vehicles of the Mullen FIVE EV Crossover began arriving this October, and that's just one vehicle launch in the queue.
Beyond FIVE's market intro, MULN plans to bring its Mullen RS to market in Spring 2023, as well as a lineup of commercial fleet vehicles intending to seize a substantial share of the demand for last-mile delivery vehicles. And part of that market, and others, can be exploited through MULN's controlling interest in Bollinger Motors. That interest positions them ideally to capture share in several markets as one of the few offering electric chassis cabs and platforms in several vehicle classes. It immediately moves MULN into the medium-duty truck classes 3-6, along with the B1 and B2 sport utility trucks. Off-road videos of the Bollinger are impressive as well. So, don't think the leisure market isn't in play. It is.
But Mullen isn't only a vehicle manufacturing company; they are a technology company, too, working intensively on developing innovative polymer solid-state battery cell technology.
MULN's EV Battery Technology Solutions Are Valuable, Too
Advancing through its prototype stage, MULN could be on the verge of finalizing an industry-best design to improve electric battery safety and capability by replacing the liquid electrolyte currently used in lithium-ion EV batteries. Trials intend to show that swapping the liquid for a solid-state alternative will significantly improve performance, power, and safety.
Remember that this current multi-billion dollar battery market opportunity is expected to become a trillion-dollar one as early as 2030. As is often the case, best-in-class products earn the lion's share of market rewards. Mullen believes its technology could transform its company into one of the lions, and it's possible. Mullen recently emphasized how its rendition of solid-state batteries offered higher energy density, faster charging time, smaller size, and safety compared to traditional lithium-ion cells. Developing new technologies has led to some partnerships, too.
Mullen is engaged with Hofer Powertrain and DSA to facilitate the manufacturing of components for its electric drive systems and remote OTA capabilities. The company is also working with and supported by ARRK, which provides computer-aided engineering, body in white, battery, closures, interior, chassis, thermal, and infotainment engineering for its EV lineup. They also joined forces with automation company Comau in a strategic alliance to develop a state-of-the-art body shop. That's not all.
They are also working with Dürr, supporting assembly and paint shop technologies, connecting seamlessly with Mullen's fully equipped engineering facility in Tunica, Mississippi, which serves as the company's Advanced Manufacturing Engineering Center and Proving Grounds for manufacturing and engineering efforts. Tapping into the experience of both, near-term expansions at the facility include integrating general assembly and test track infrastructure. There's more to like.
More value is expected to accrue from MULN's desire to acquire an additional factory for Mullen FIVE production and various new programs, which, if consummated, could expedite MULN's mission to become a major sector player. With gravity pulling shares lower, the accretive value from all the above appears conspicuously absent from MULN's valuation.
A Bullish Proposition That's Getting Stronger
Still, investors know that valuations in emerging companies on the heels of transformation can change quickly. And those that execute well often see exponential increases in value, sometimes within minutes of an announcement. With several expected from MULN by the end of the year, gains similar to its 177% surge could again be in style. Again, not hype-based but substance backed.
Indeed, from the sidelines, the tug-of-war between long and short sellers can be entertaining. At the same time, though, that banter does help create opportunities at attractive prices. With the sum of MULN's parts appreciably stronger than a month ago and with enhanced revenue-generating opportunities in its scope, taking advantage of them as they come may be a wise consideration.
Undoubtedly, many think MULN scored EV gold when it acquired exclusivity to the I-GO. And many more argue that deal is just a small part of a much bigger developing story. The excellent takeaway is that both can be right, which keeps the storyline bullish for Mullen Automotive. And with several updates expected over the next few weeks, that story likely won't change, and better yet for MULN longs, get an even happier chapter added.
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