Mullen Automotive Inc. (MULN) in Brea, Calif., produces and markets electric automobiles. It also operates CarHub, a digital platform that uses artificial intelligence to deliver an interactive solution for purchasing, selling, and owning a car, and battery technology and emergency point-of-care solutions.

However, the company's shares have declined 80.3% in price year-to-date and 91.3% over the past three months. Closing yesterday's trading session at $1.03, the stock is currently hovering near its all-time low of $1.01.

While MULN is making efforts to boost its top-line performance, the growing competition in the EV space coupled with supply chain constraints could mar its growth.

Here is what could shape MULN's performance in the near term:

Increasing competition

Along with Tesla Inc. (TSLA), the current market leader, Ford Motors (F) and General Motors Co. (GM), are aggressively investing in electric vehicles (EVs). Last month, General Motors announced that it would spend $154 million on an electric car motors factory in Western New York. The funds will be used to renovate the New York Lockport Components facility and install new equipment capable of producing electric vehicles.

Strategic Collaboration

Last month, MULN announced a strategic agreement with Comau, a leading Italian systems integrator and solutions provider with proven expertise in the automotive sector, for a build-out of a vehicle body shop at MULN's Advanced Manufacturing and Engineering Center (AMEC) in Tunica, Mississippi. MULN and Comau are collaborating to create a cutting-edge body shop for the new and forthcoming Mullen FIVE EV Crossover.

Poor Profitability

MULN's ROC and ROA stood at negative 5261.5% and 166.7%, respectively, compared to the negative industry averages of 7.53% and 5.94%. In addition, its cash from operations came in at a negative $32.32 million compared to its $181.03 million industry average.

POWR Ratings Reflect Uncertainty

MULN has an overall C rating, which equates to a Neutral in our proprietary POWR Ratings system. The POWR ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. MULN has a D for Quality which is consistent with its poor profitability.

Of the 69 stocks in the F-rated Auto & Vehicle Manufacturers industry, MULN is ranked #37.

Beyond what I have stated above, you can view MULN ratings for Growth, Value, Stability, Momentum, and Sentiment here.

Bottom Line

While the company is undertaking various strategies to boost its operational efficiency, the stock has lost significant ground over the past months. In addition, the company’s poor profitability could further amplify its price decline. So, we think investors should wait before scooping up its shares.

How Does Mullen Automotive Inc. (MULN) Stack Up Against its Peers?

While MULN has an overall C rating, one might want to consider its industry peers Isuzu Motors Limited (ISUZY), which has an overall A (Strong Buy) rating and Daimler AG (DDAIF), and Hino Motors Ltd. (HINOY), which has an overall B (Buy) rating.

MULN shares were trading at $0.86 per share on Wednesday afternoon, down $0.17 (-16.95%). Year-to-date, MULN has declined -83.56%, versus a -6.39% rise in the benchmark S&P 500 index during the same period.

Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate.

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