Source: Ringo Chiu/Shutterstock
Mullen Automotive (NASDAQ:MULN) the stock quickly lost most of what it had gained after it closed its acquisition of bankrupt Electric Last Mile Solutions (ELMS).
The deal brings Mullen a factory in Indiana where he says he will make an electric SUV called the Five. But Mullen lacks the money to get into production.
Shares jumped 13% on December 1 but fell 8% overnight. Skepticism about the company’s long-term future remains high.
Will Mullen succeed?
Mullen stock began trading today at 20 cents/share, with a market capitalization of $360 million. A year ago, the stock was at $6.60/share. Like electric start-ups like Lucid Engines (NASDAQ:LCID) and Rivian Automotive (NASDAQ:SHORE) have put cars into production and mainstream automakers like General Engines (NYSE:GM) and Ford engine (NYSE:F) entered the sector, Mullen was left on the starting grid.
CEO David Michery, a former music executive, was long on promises but inefficient. A Five prototype toured the country. The company has also promised to manufacture utility vehicles in Mississippi since buying Bollinger Motors in September.
But Mullen’s most recent balance sheet, dated June, showed him with just $61 million in cash. Mullen had to raise $150 million from current shareholders to buy ELMS.
Bears like our Brenden Rearick note that ELMS and Bollinger were on their last legs when Mullen acquired them. Michery also sold 2.53 million shares as they fell, which is not meant to inspire investor confidence.
MULN Stock: What Happens Next?
Michery still expresses confidence in Mullen, but the title has been under threat of delisting since September. It last traded above $1/share in July.
In business, 1+1 is sometimes equal to 2, and sometimes to 1. But it can also be that even 1+1+1 is equal to zero. This may be such a case. I wrote in May that I don’t think Mullen has a future and I stand by that view.
As of the date of publication, Dana Blankenhorn did not hold any positions at the companies mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.