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Mullen Automotive’s stock has been in the spotlight this week following criticism from a Hindenburg Research report. The stock is currently trading at $2.44, which is about 45% below its peak on March 22 and 88% below its all-time high, giving the company a market cap of over $500 million.
The electric vehicle (EV) industry has seen rapid growth in recent years, with many new companies entering the market, inspired by the success of Tesla. The typical process for these companies has been straightforward: a charismatic founder, often from the automotive industry, launches the company and creates an impressive website. They then unveil a demo vehicle, often at a major auto show, and begin raising capital and taking pre-orders. As they progress, they announce partnerships with large companies and may go public. However, in some cases, these pre-ordered vehicles never make it to market. This model has been used by companies like Lucid, Rivian, Canoo, and even Mullen Automotive. Notably, Lucid and Rivian have successfully delivered their vehicles.
Mullen’s stock took a hit this week after Hindenburg Research accused the company of being an “EV hustle.” The report alleged that Mullen misrepresented the test results of its battery technology and faced numerous production challenges, including the lack of an EPS certificate for its vehicles. It also questioned the legitimacy of the company’s $60 million in orders, claiming they came from a small cannabis company with just one location.
The report further accused Mullen’s top shareholder, Terren Peizer, of backing several companies that experienced rapid growth followed by sharp declines. So, what’s next for Mullen Automotive? After reviewing the report, it’s clear that the company’s future is uncertain, despite management’s rejection of the claims. Like Rivian, Mullen may continue to face significant margin pressures as commodity prices rise.
On the daily chart, MULN’s stock price has been in a recovery phase since hitting an all-time low of $0.53 on February 25th. The stock’s rebound was largely driven by product updates provided to investors. However, the momentum has recently faded following the release of the Hindenburg report.
The stock is currently hovering around the 25-day and 50-day moving averages, while the Smart Money Index (SMI) has been declining. Trading volume has also remained elevated. Given these factors, the outlook for the stock appears bearish, with the next key level to watch at $1.5. However, as a penny stock, there’s always the potential for it to go parabolic if bulls decide to pump it.