Investors in Mullen Automotive (NASDAQ:MULN) just can’t catch a break.
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Shares of the California-headquartered electric vehicle start-up tumbled over 50% over the past month — and it seems that not even good news can keep this stock revving higher for long.
On Monday, Mullen announced a partnership with Rapid Response Defense Systems (RRDS) to work together on a “$2.7 billion federal fleet vehicles IDIQ contract… to fast-track U.S. Federal Government opportunities for potential large-scale vehicle fleet orders.” Commenting on the alliance, RRDS senior vice president for federal contracts Fred Bouman confirmed that “Mullen’s Class 1 EV cargo van launches this year and will be the only class 1 EV van in the market. It is 100% electrified, making it a strong fit for [the] federal government business” that RRDS is bidding on.
$2.7 billion worth of taxpayer dollars up for grabs? Enthusiastic praise from an industry partner? That all sounds like pretty good news for Mullen, and the EV stock’s shares perked up 4.5% on Monday in response to the news. One day later, however, Mullen gave back all its gains, and indeed fell 9.4% — and this despite even more apparent good news for the company.
On Tuesday, you see, Mullen announced that it is launching not one, but two separate products this year — the Class 1 electric cargo van than RRDS was talking up yesterday, and also a Class 3 low-cab forward electric van.
Both are likely to attract more than their fair share of local attention, too, given that one of Mullen’s big factories is just up the road in Mishawaka, Indiana. But neither of these announcements, nor RRDS announcement, either, were able to save Mullen stock from suffering a near-10% loss on Tuesday.
So what’s bugging investors about Mullen Automotive stock? Well, it may have something to do with the fact that last month Mullen reported Q1 2023 financial results showing a near-$377 million in a single quarter, and bringing its losses for the last 12 months to just under $960 million.
For a company with a market cap less than half that amount, that’s quite a lot of money to be losing.
Or it could be the contents of Mullen’s back-to-back press releases themselves, which honestly left much to be desired. On the RRDS alliance, for example, it’s well and good to be part of an alleged $2.7 billion contract — but it would be even better to be allying with a company that people have heard of before. Raise your hand if you ever even heard of “Rapid Response Defense Systems” before Mullen issued its press release — much less have any idea whether the company has a chance of winning that $2.7 billion in federal business.
And as for the NTEA announcement, let’s just say there’s a long distance to travel between advertising a truck at a trade show, and winning substantial orders from actual customers with dollars in hand and a willingness to spend them on your product.
Unless and until Mullen has an actual product for sale, and is racking up actual revenue from such sales, the stock could struggle to gain traction with investors.
Furthermore, MULN has a Smart Score of 1 on TipRanks, meaning that it is likely to underperform the market. (See MULN stock analysis)
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