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Mullen Automotive’s Quad Of Updates, Including 66% Debt Reduction, Expose A Valuation Disconnect Worth Seizing ($MULN)

Mullen Automotive's Quad Of Updates, Including 66% Debt Reduction, Expose A Valuation Disconnect Worth Seizing ($MULN)

Mullen Automotive (NASDAQ: MULN) stock is in a bullish mood, soaring by over 30% since October after a trio of updates electrified the investor community into opening new or adding to MULN positions. The surge in interest is warranted. In the past few weeks alone, MULN announced a potentially transformative acquisition of new assets, exclusive licensing to market the I-GO last-mile EV in particular European markets, and robust demand for its FIVE EV Crossover. It gets better.

On an intra-month basis, the increase was more impressive. During its peak in October, MULN stock skyrocketed by over 177%. And the more excellent news is that those gains are holding despite turbulent market trading. And a MULN update on Wednesday considerably strengthened an already bullish proposition that, when all tolled, adds to reasons why investors may want to take advantage of a valuation disconnect between MULN stock and its revenue-generating arsenal sooner than later. The opportunity, in many respects, looks too good to ignore. 

By the way, many investors aren’t. In fact, even ahead of Wednesday’s announcement, a herd of investors started paying closer attention to the moves made by MULN in just the past few weeks. And combining their influence with a heavy dose of short covering, they appear to have created a path of least resistance for MULN shares to the appreciable upside. That’s a trend likely to continue, noting that company updates, not hype, are driving the MULN rally. In fact, MULN just dropped some news that should have investors excited and shorts running for cover. 

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Revenue-Generating Firepower In-Play

On Wednesday, MULN announced eliminating $13 million in company debt, of particular interest to many, leaving them with only about $10 million in debt left on the books. That’s a sharp decline from the roughly $30 million indebtedness last year. And more importantly, puts the potential for MULN to become debt-free much quicker than most expected. For an emerging EV sector player with several products hitting the pavement and development programs in the late stages, it’s a distinction that adds tremendous intrinsic value. 

It also helps on the inherent front, with MULN more able to spend money to make money instead of servicing debt. And with its balance sheet now in its best shape in company history, it can leverage its financial health to capitalize on and maximize near-term revenue-generating opportunities. Reducing debt by 66% in less than a year typically has that effect. 

Here’s the even better news. The string of positive updates announced over the past few weeks didn’t fall into MULN’s lap by coincidence. They result from a well-managed and ambitious company doing the right things at the right time. Moreover, the strides made by MULN fundamentally and operationally set MULN up to do more of the same. And that expectation is doing more than invigorating investor confidence; MULN meeting them can shift them from hypergrowth to warp speed. 

Additional updates support that presumption.

Adding Value To A Growing Arsenal

Last month, MULN closed a deal acquiring what could be a game-changing asset for the company. Investors appear to believe so; they sent shares higher by over 77% after MULN announced acquiring exclusive sales and marketing rights to sell the I-GO in particular European markets. Considering that the I-GO is described as a “perfect” electric vehicle for urban European markets, that sharp and impressive move higher could still be leaving money on the table, especially with the I-GO expected to fill a massive niche last-mile services opportunity in those markets. From a size and logistics perspective, it certainly meets market needs. 

It boasts a short but powerful 96-inch wheelbase, 16.5-kWh battery pack, rear-wheel drive, and a curb weight of only 1,753 lbs. Add with its NEDC estimated range of 124 miles per charge and its ability to easily handle the stop/go and weave in/out typical of narrow European urban streets, it’s already jumping in the polls as a favored vehicle choice for both last-mile delivery companies and consumers wanting convenience and value. It meets all those needs. 

In fact, the I-GO was specifically built to meet them, designed to get to the customer’s door faster and provide affordable in-town EV options while decreasing pollution and congestion levels across Europe. It’s attractively priced, too. The I-GO will have a starting price of only $11,999 plus taxes and fees and will be retailed and serviced through supporting local European distributors. Investors in MULN should appreciate the value this deal can deliver. Short sellers, not so much. They may even be willing to admit that the acquisition is a significant win for MULN, an inducement to cover positions.

Remember, in addition to providing MULN with massive new revenue-generating opportunities, it also promotes and extends its brand into other countries while simultaneously allowing them to remain focused on its mission of manufacturing its lineup of impressive EVs in the USA. Those include MULN’s current commercial vehicle lineup comprised of Class 1 and 2 EV cargo vans, Class 3 through Class 6 vehicles resulting from its majority acquisition of Bollinger Motors, and its Mullen FIVE series. 

Incidentally, in addition to securing the exclusive sales, distribution, and branding rights for the I-GO in Spain, France, Germany, the UK, and Ireland, MULN said it also entered into an Asset Purchase Agreement to acquire all assets of Electric Last Mile Solutions, Inc. and Electric Last Mile, Inc. (“ELMS”) from the ELMS Bankruptcy Estates. That deal can considerably extend MULN’s marketing and sales reach.

Thus, MULN, in the past few weeks alone, has scored multiple milestones positioned to become catalysts. And when catalysts get reached, company share prices typically respond in an overwhelmingly bullish fashion. 

MULN Readies To Monetize Its Assets

That’s a likely scenario for MULN. Overnight, MULN went from a medium to long-term play to a near-term and compelling value proposition. And despite its recent appreciation, MULN shares still look appreciably disconnected from an appropriate valuation. But that’s not altogether bad news; valuation disconnects expose opportunity.

And MULN presents one from more than just a product standpoint. While MULN is well-fortified with a best-in-class product lineup, it’s also steered by an executive management team with extensive EV, OEM, and startup experience. They combine to leverage nearly two decades of EV experience and are fluent in battery modeling, algorithm development, and robust engineering in battery management systems (BMS) development. With the commercial fleet vehicle demand soaring, better battery solutions needed, and last-mile delivery EV service needs expected to grow by 78% by this decade’s end, having that asset as part of a broader infrastructure matter. 

It’s paying dividends already. MULN can be quick to market, enjoys lower capital investment than other EV startups, and leverages US-based manufacturing and operations, allowing them to create, manufacture, and deliver competitively priced products to market. 

Being Strikingly Different Is Part Of The Intention

They have an excellent start; creating an end-to-end ecosystem could make “going electric” more accessible than ever. And considering that millions of private and public-sector consumers want the types of products Mullen sells and plans to sell, and now with an overseas presence, MULN and its shares could shift into hypergrowth. Actually, both already are.

On the products side, its Mullen FIVE EV is attracting significant attention. It’s a “strikingly different” addition to the premium midsized electric-powered sport utility vehicle market that is more than stunningly designed and engineered; it’s manufactured entirely in the USA. But that’s only part of its appeal. Its timeless design and intuitive functionality also showcase power, going from zero to sixty in 3.2 seconds, positioning it at or near the top of many categories compared to competing vehicles’ styles and performance. But there’s more to like. It’s also equipped with modern advancements like facial recognition technology, an integrated LED lighting system, voice command, and PERSONA, a personal vehicle assistant controlled via app managing preferences and security modes. 

That’s led to consumer opinions overwhelmingly supportive of the car, placing it among the best in the space and earning competitive respect against Ford’s Mach E (NYSE: F), General Motors (NYSE: GM) EVs, the Toyota (NYSE: TM) bZ4X and the Tesla Model Y (NASDAQ: TSLA). Those wanting to see it in action won’t wait long. The first fully functional demonstrator vehicles of the Mullen FIVE EV Crossover will begin arriving this October, and that’s just one vehicle launch in the queue. 

Beyond FIVE’s market intro, MULN plans to bring its Mullen RS to market in Spring 2023, as well as a lineup of commercial fleet vehicles intending to seize a substantial share of the demand for last-mile delivery vehicles. And part of that market, and others, can be exploited through MULN’s controlling interest in Bollinger Motors. That interest positions them ideally to capture share in several markets as one of the few offering electric chassis cabs and platforms in several vehicle classes, and immediately moves MULN into the medium-duty truck classes 3-6, along with the B1 and B2 sport utility trucks. Off-road videos of the Bollinger are impressive as well. So, don’t think the leisure market isn’t in play. It is.

But Mullen isn’t only a vehicle manufacturing company; they are a technology company, too, working intensively on developing innovative polymer solid-state battery cell technology. 

Innovative Battery Technology Puts Partnerships In-Play

Advancing through its prototype stage, MULN believes it is on the verge of finalizing an industry-best design to improve electric battery safety and capability by replacing the liquid electrolyte currently used in lithium-ion EV batteries. Trials intend to show that swapping the liquid for a solid-state alternative will significantly improve performance, power, and safety. 

Remember that this current multi-billion dollar battery market opportunity is expected to become a trillion-dollar one as early as 2030. As is often the case, best-in-class products earn the lion’s share of market rewards, and Mullen could become one of the lions. The company recently emphasized how its rendition of solid-state batteries offered higher energy density, faster charging time, smaller size, and safety compared to traditional lithium-ion cells. 

Accretive partnerships matter too, and MULN has them. Mullen is engaged with Hofer Powertrain and DSA to facilitate the manufacturing of components for its electric drive systems and remote OTA capabilities. The company is also working with and supported by ARRK, which provides computer-aided engineering, body in white, battery, closures, interior, chassis, thermal, and infotainment engineering for its EV lineup. 

They also joined forces with automation company Comau in a strategic alliance to develop a state-of-the-art body shop. They are also working with Dürr, supporting assembly and paint shop technologies. They connect seamlessly with Mullen’s fully equipped engineering facility in Tunica, Mississippi, which serves as the company’s Advanced Manufacturing Engineering Center and Proving Grounds for manufacturing and engineering efforts. Tapping into the experience of both, near-term expansions at the facility include integrating general assembly and test track infrastructure. 

That’s not all. More value can accrue from MULN’s desire to acquire an additional factory for Mullen FIVE production and various new programs, which, if consummated, could expedite the entirety of the MULN value proposition. Even after the recent spike, the accretive value from all the above appears to be entirely absent from its valuation. 

The Bulls Have Taken The MULN Reigns

Still, valuations can change quickly, and from the looks of trading, it’s already starting to. Not because MULN stock is part of a momo play but because they are executing a growth plan that is beginning to develop and bear financial fruit faster than many expected. MULN’s updates, all accretive to a revenue-generating plan, prove that point. 

Thus, while particular parts of the MULN opportunity are attractive, it’s the sum of them that should be attracting investors’ attention. Its expansion into overseas markets, the strong demand for its vehicles, potentially industry-best battery technology, and an ability to find and fill niche opportunities with billion-dollar potential are indeed worthy of earning that it. 

The most important consideration, though, is that MULN’s mission of creating sustainable value appears far from over. Recent transactions and updates show that’s the case and, more importantly, that momentum is on its side. That combination spells out a clear bottom line- taking a position in MULN is more than a compelling consideration; it’s a timely one.


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