Were the Short Sellers Right About Mullen Automotive?

 | Dec 02, 2022 02:17AM ET

  • Mullen Automotive released another positive catalyst for share prices
  • The short sellers are still out in force, but their numbers are dwindling
  • An upward movement in share prices should begin soon because revenue is at hand

    • To say the short sellers were wrong about Mullen Automotive Inc (NASDAQ:MULN) would be ludicrous. With the stock down 95% in the last year alone, it is obvious the short sellers were very right about Mullen Automotive stock.

    Are they right now? The company has issued many positive news releases compounded by another that has it on track to produce vehicles next quarter. That’s next quarter — a full year ahead of schedule. The odds are high that company momentum will build. The shorts were right about Mullen then, but this is now. They might not be so right after all.

    The short sellers are still out in force but have trimmed their holdings. The short interest in Mullen Automotive at the start of December is only 10%, down more than 75% from two weeks ago. While not a guarantee this stock is at the bottom, it is another bit of evidence suggesting major turnaround brews in this market.

    h2 Mullen Automotive Closes on ELMS Assets/h2

    Today, Mullen Automotive issued a press release stating it had closed on the Electric Last Mile Solution assets. These include a production facility, inventory, and intellectual property. The truly good news in this announcement is that it plans to start production of Mullen Automotive’s commercial vehicle line, which will also include Bollinger Motors vehicles. Deliveries will begin in the year's first half, barring any hiccups; another revenue stream is at hand. This news follows the I-GO deal with Newgate Motor Group to market vehicles in Ireland, the United Kingdom, and parts of the European Union.

    The plant in Mishawaka, Indiana, was previously used to build Hummer H2s and Mercedes R-Class vehicles, so it is fully capable of producing Mullen vehicles. At this time, the company plans to launch the Mullen Five SUV crossover and the Bollinger B1 and B2 platforms. The company plans to build and deliver Class-1 vehicles in Q1 2023, with Class-2 deliveries beginning in Q3.

    David Michery, CEO and chairman of Mullen, said,

    “I have been working on this plan for many years, putting in place the strategic and critical enablers to be a dominant competitor in the EV market. Successfully completing this asset acquisition moves Mullen into an all-new position with IP, plants and product platforms that no other competitor can offer to both retail and commercial customers. We have everything we need to launch the Mullen and Bollinger EVs product lineup.”

    h2 Mullen Automotive Misses Deadline: So What?/h2
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    The price action in Mullen Automotive came under intense pressure in the weeks leading up to the ELMS takeover. The cause was an anticipated deadline that turned out to be a non-news event. The deadline was for a definitive order for vehicles from an Amazon (NASDAQ:AMZN) delivery partner that may yet still come. Not getting the order did not cause a share price implosion, and now there is a new catalyst to buy. The primary reason to short Mullen is the lack of production and revenue, which is now moot.

    Mullen Automotive shares are up strong double digits on the news and on incredibly high volume. Over the past month, the average daily volume has been 155 million shares. The market hit that target within the first half hour of trading. Assuming the market views this news as favorably as it appears, shares of Mullen Automotive could complete a bottom and reverse course. Near-term targets are near $0.60, while mid- to long-term targets are in the $1 to $10 range.