Mullen Automotive (NASDAQ: MULN) just issued another press release that has shifted the outlook for the company into higher gear. The company says Randy Marion Automotive Group has signed on as its 1st US dealer partner. The partnership means Randy Marion Automotive Group will market, sell and service Mullen’s lineup of commercial EVs including complete vans and chassis/cab combinations. Randy Mario Automotive Group is one of the largest and most respected dealers of commercial vehicles with a network of dealerships in the Carolinas.
“We are impressed with Mullen Automotive’s EV lineup, their speed to market, and, most notably, their focus on an underserved commercial market for EV vehicles,” said Randy Marion, CEO, and founder of RMA. “This is especially obvious when you consider what has taken place in the Class 1 light cargo van category. OEMs have all exited from the commercial Class 1 van segment, leaving the door wide open for Mullen’s EV lineup.”
Momentum Builds For Mullen Automotive
The news is the 2nd major deal for the company in the last 6 weeks and promises to bring revenue as early as late in Q1. The recent acquisition of assets from Electric Last Mile as the company on track to begin delivering the first of its Class 1 vehicles by the end of the 1st quarter and Randy Marion Automotive could be the 1st customer.
This is on top of the deal with Newgate Motors to market and sell I-Go vans in Ireland and the UK which is expected to bring revenue as early as the 1st month of calendar Q1 2023. What this means for investors is that not only will the company have begun production and validated the string of good news but the results of the upcoming shareholder could be moot.
Investors are expected to vote on a number of issues including a reverse stock split and authorization to increase the share count. The 1st move is due to the stock’s low price, trading under $1 it is below NASDAQ’s threshold and they’ve already missed one deadline to increase the share price.
The 2nd move is to provide a path to liquidity that is not dependent on the debt market. It’s a smart move for management but dilutive for investors so it is a factor weighing on the share price. Based on CEO David Michery’s purchase of a single share of Class AA stock he is in favor of the reverse split at least. Not only does the share carry enough votes to ensure the measure passes but it is also immediately redeemable for cash upon passage.
The factor that makes this all moot is revenue. If the company can start generating revenue the share price will take care of itself and there will be a reduced need for capital-raising activities like share dilution.
The question is if evidence of revenue will appear before the vote takes place and it looks like that is unlikely. This means the market could experience some volatility over the next few weeks to a few months but it looks like the bottom is in.
The Tides Of Ownership Are Changing
Not only is the short interest in Mullen Automotive down from its peaks near 45% but the institutional ownership is on the rise. Short interest is down to nearly 11% as of the latest report which is still high but significantly improved on a month-to-month basis. The institutions are also buying, having added nearly $7 million worth of shares in the Q4 to-date period.
This has the total up to almost 12% with names like BNY Melon, State Street, Two Sigma Investments, Vanguard and BlackRock holding most of the shares.
Turning to the chart, shares of Mullen Automotive are up strongly in premarket action and showing some support in the $0.19 to $0.20 range. If the bulls can get a foothold price action may move up to the $0.25 range before hitting firm resistance.
A move above that level, which is consistent with the 30-day EMA, would be bullish and could send the stock back above $0.30 in the near term. If not, Mullen may continue to wallow near its recent lows.