Electric vehicle company Mullen Automotive (MULN) has lost more than 90% this year and is currently trading at lower than 50 cents. However, it might not be wise to get tempted by the low price and invest in the stock due to its weak fundamentals. Read on….
Automotive company Mullen Automotive, Inc. (MULN) distributes and sells electric vehicles (EVs). The company also operates CarHub, a digital platform that leverages artificial intelligence to offer an interactive solution for buying, selling, and owning a car.
On October 19, MULN announced that the U.S. Bankruptcy Court approved its acquisition of EV company Electric Last Mile Solutions’ (ELMS) assets on October 13 in an all-cash purchase. MULN is expected to acquire ELMS’ manufacturing plant, inventory, and intellectual property.
The stock has declined 93.3% year-to-date and 20.5% over the past month to close its last trading session at $0.35. While MULN has gained 51.4% over the past five days, it is still trading below its 50-day and 200-day Moving averages of $0.51 and $1.44, respectively.
Here are the factors that could affect MULN’s performance in the near term:
Insider Sale
On September 22, MULN’s CEO David Michery sold 750,000 shares at an average price of 40 cents per share. This year, he sold shares on seven occasions starting on January 18, bringing the total sold shares to 2.53 million. The CEO’s actions on MULN could mean his reduced confidence in the company’s prospects.
Bleak Financials
For the fiscal quarter that ended June 30, MULN’s loss from operations came in at $18.22 million, widening 184.5% year-over-year. Its net loss increased 289.9% from the prior-year quarter to $59.47 million. Its net loss per share came in at $0.16.
Poor Profitability
MULN’s trailing-12-month ROTC of a negative 618.14% compares to the industry average of 6.79%. Its trailing-12-month ROA of a negative 169.94% compares to the industry average of 5.14%.
POWR Ratings Reflect Bleak Prospects
MULN’s POWR Ratings reflect this bleak outlook. The stock has an overall F rating, equating to a Strong Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different 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 Value grade of F, in sync with the stock’s trailing-12-month Price/Book multiple of 9.12, which is 385.6% higher than the industry average of 1.88.
The stock also has a D grade for Quality, consistent with its poor profitability.
In the 65-stock Auto & Vehicle Manufacturers industry, it is ranked #57. The industry is rated D.
Click here to see 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
The company’s CEO frequently selling its stock might make investors anxious. Moreover, its bleak bottom-line performance is concerning. Also, the stock is trading below its moving averages, signaling a downtrend. Hence, it 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, Jardine Cycle & Carriage Limited (JCYGY) and Subaru Corporation (FUJHY), which have an overall A (Strong Buy) rating, and Suzuki Motor Corporation (SZKMY) and Renault SA (RNLSY), which have an overall B (Buy) rating.
MULN shares rose $0.00 (+0.83%) in premarket trading Friday. Year-to-date, MULN has declined -93.31%, versus a -22.17% rise in the benchmark S&P 500 index during the same period.
Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
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