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Mullen Auto stock price sinks as MULN EV start-up bids for bankrupt competitor Electric Last Mile

By David Burrows

09:29, 20 September 2022

Mullen 5 car on show. Photo:Shutterstock
Mullen Autos has struggled with supply and cost issues. Photo: Shutterstock

EV start-up Mullen Automotive is the leading bidder for the assets of bankrupt competitor Electric Last Mile Solutions

According to a report from Bloomberg, Nasdaq-listed (US100) Mullen agreed to a stalking horse bid of almost $100m for Electric Last Mile. Competing bids are due by October 3, and an auction will be held on 7 October.

The assets include a now-inactive former Hummer SUV factory in Indiana.

Mullen Auto has not been shy regarding efforts to expand its business via acquisition. Just over a week ago, Capital.com reported on Mullen Automotive’s acquisition of a 60% stake in Bollinger Motors for $148.2m in cash and stock.

It was hoped that this could provide a much-needed boost to Mullen’s profile as well as its share price. It didn’t.  

Nor has the news that Mullen Auto intends to scoop up the assets of Electric Last Mile – the share price actually moved downwards to a current level of $0.46. To put this in context, shortly after Mullen Auto’s IPO in November 2021, the stock soared to highs of around $16.

At $0.46 the stock certainly looks cheap but then it is a very volatile stock in a sector that is challenging to put it mildly.

EV start-ups may at some point penetrate the still-evolving market but there is no doubt that established players like Tesla (TSLA) enjoy a dominant position right now.  

Tesla share price chart

Those like Mullen Auto looking to bring vehicles to market have little or no track record to speak of and have also been hindered by supply chain issues and rising costs.

While the increased stake in Bollinger may have signalled ambitious intent, City watchers still harbour concerns about Mullen Auto and this won’t have been helped by Mullen Auto's recent admission that it had fallen out of compliance with Nasdaq’s minimum share price requirements.

TSLA

175.03 Price
-1.480% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 21:00 (UTC)
Spread 0.18

AMC

4.78 Price
+3.100% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 21:00 (UTC)
Spread 0.09

NVDA

948.55 Price
+2.530% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 21:00 (UTC)
Spread 0.11

AMD

166.24 Price
+1.020% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 21:00 (UTC)
Spread 0.14

Undoubtedly things can change quickly in this sector – at the beginning of 2022, Mullen Auto was named as the top EV start up to watch.  Less than a year later, the share price is on the floor.  But the ink is only just dry on the Bollinger deal and other bidders may yet enter the fray for Electric Last Mile.

The increased stake in Bollinger might meaningfully increase the number of electric vehicles brought to market. And if the bid for Electric Last Mile’s assets proves successful, that could bring significant capacity benefits.

But at the moment there are quite a few ‘ifs’ – which many market watchers might say is reflected in the low price.

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Mullen Autos fair value?  

One of the issues with Mullen Auto is that as a new player in this market – there is plenty of mention of potential but nothing concrete to look back on.

As Simply Wall St points out there is insufficient data to calculate Mullen’s fair value for valuation analysis.

How an ‘expanded’ Mullen Autos performs over the coming months will be interesting to watch.  

David Michery, CEO and chairman of Mullen Automotive has been bullish about the company’s prospects, insisting growth via acquisition has put Mullen Autos in a very strong position.

The depressed share price would seem to indicate that investors, so far at least, are waiting to see the bold talk backed up by tangible numbers.  

Markets in this article

TSLA
Tesla Inc (Extended Hours)
175.03 USD
-2.62 -1.480%
US100
US Tech 100
18661.4 USD
113.3 +0.610%

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
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