MULN: Things Don't Look Pretty Under the Hood for This Stock

With a $310.67 million market cap, Mullen Automotive, Inc. (MULN) manufactures and distributes electric vehicles. In addition, the company operates CarHub, a digital platform that leverages AI to provide an interactive solution for buying and selling a car. It also offers battery technology and emergency point-of-care solutions.

Investors have been bearish about MULN due to its deteriorating financials and declining market share. In a filing with the U.S. Securities and Exchange Commission (SEC), the company admitted, “Since inception, we have incurred significant accumulated losses of approximately $278.9 million, and management expects to continue to incur operating losses over the near future.”

The EV manufacturer is increasingly burning cash. As the company nears the production phase, more capital expenditures and research and development spending will be needed. These factors are expected to affect its profitability.

Furthermore, as an early development company, MULN has dealt with various issues, including supply chain disruptions, materials inflation, strict government regulations, and stiff market competition. While seasoned EV makers handled these obstacles well, MULN being a startup, has been walloped.

The stock has plunged 50.8% in price over the past six months and 93.9% year-to-date to close the last trading session at $0.61. It is currently trading 96.2% below its 52-week high of $15.89, which it hit on November 17, 2021.

Here is what I think could influence MULN’s performance in the upcoming months:

Poor Financials

For the fiscal 2022 quarter that ended June 30, 2022, the pre-revenue company reported a loss from operations of $18.22 million, widening 184.5% year-over-year. MULN’s net loss worsened 289.9% from the prior-year period to $59.47 million, while its net loss per share came in at $0.16.

As of June 30, 2022, MULN’s current and total liabilities were $58.52 million and $65.11 million, respectively. In addition, cash outflows from operating and investing activities came in at $128.51 million and $11.27 million, respectively, for the nine months ended June 30.

Low Profitability

In terms of trailing-12-month return on common equity, MULN’s negative 618.14% compares to the 7.09% industry average. Likewise, the stock’s trailing-12-month return on total assets of negative 169.94% compares to the industry average of 5.19%. Its trailing-12-month cash from operations of negative $47.71 million compares to the industry average of $107.83 million.

POWR Ratings Reflect Bleak Prospects

MULN's overall F rating translates to a Strong Sell in our proprietary POWR Ratings system. The POWR Ratings are calculated 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 grade of D for Quality, consistent with its lower-than-industry profitability metrics.

MULN is ranked #54 out of 65 stocks in the D-rated Auto & Vehicle Manufacturers industry

Beyond what I have stated above, we have also given MULN grades for Sentiment, Growth, Value, and Momentum. Get all MULN ratings here.

Bottom Line

Electric vehicle manufacturer MULN delivered poor financial results in its last quarter. And management expects the company to report significant losses in upcoming quarters. The stock is currently trading below its 50-day and 200-day moving averages of 0.89 and 2.40, respectively, indicating a downtrend.

In addition, the company’s low profitability could amplify its price decline. So, we think it could be wise to avoid this stock now.

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

MULN has an overall POWR Rating of F. One could also check out these other stocks within the Auto & Vehicle Manufacturers industry with an A (Strong Buy) rating: Stellantis N.V. (STLA), Volkswagen AG (VWAGY), and Daimler AG (DDAIF).

MULN shares rose $0.03 (+4.92%) in premarket trading Friday. Year-to-date, MULN has declined -88.34%, versus a -15.08% rise in the benchmark S&P 500 index during the same period.

Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.

More...