Key points:
- Mullen Automotive becomes the target for notorious short-seller Hindenburg Research
- They claim the company has misled investors on multiple occasions, including battery-testing
- Will the report leave the new EV company in disripute, like Nikola?
If you’ve been following the exponential growth of the EV market through SPACs, mergers, and more; you’ll be aware of how strong a role preconceptions can play in attracting ill-thought investment. Underpinning a large number of new EV companies is pure speculation and rosy projections; there is little separating them on a foundational level.
Mullen Automotive is the subject today, following a damning report from famed short-seller Hindenburg Research. Not too long ago, it was EV truck manufacturer Nikola under the spotlight, which led to serious disruption within the company. So what’s going on at Mullen Automotive?
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The theme of misleading investors is becoming worryingly common amongst new EV companies grasping at straws to win investors, puppeteering the public about promising developments. Firstly, Hindenburg focused on Mullen’s apparent battery-testing, in which the company used a ‘rehash’ of an announcement made in 2020; the company’s website shows no such announcement available from 2020.
Secondly, the short-sellers claim that Mullen’s purchase orders are misleading; stating a 1,200 vehicle order is from a cannabis retailer with only one store, an online retailer that tends to ship its products via mail, and a 10,000 vehicle order from a Florida firm that currently only operates 11 vehicles. Clearly, not everything adds up here.
The third and final claim from Hindenburg argues that the company’s announcement of the manufacturing of two electric vans were actually imported from China and rebranded accordingly. There are also doubts surrounding the company’s ability to manufacture vehicles at its Mississippi plant, doubting the chances of scalability from two-seater vehicles to larger vans.
MULN shares dropped around 5% following the report’s publication, and investors should expect a lot more negative sentiment to follow in the coming days, should further details surface. The EV market is becoming a hotbed for curated idealism, and researchers such as Hindenburg are playing an important role in revealing fraudulent information.
