Key points:
- Mullen Automotive (MULN) stock rallied 16.4%, extending yesterday’s rally.
- The rally was driven by Mullen’s acquisition of bankrupt EV firm ELMS.
- However, the question remains, will Mullen succeed long term?
The Mullen Automotive Inc (NASDAQ: MULN) stock price rallied 16.38%, extending yesterday’s rally, which saw the stock close the day up 57.12% after confirming that it had acquired the asset of the bankrupt EV company Electric Last Mile solutions (ELMS) in a deal worth $240 million following the Bankruptcy court’s approval of the same.
Mullen told investors that the acquisition of ELMS would enable it to produce up to 50,000 EVs annually at the ELMS factory in Mishawaka, Indiana, where it plans to produce its Mullen five crossover, Bollinger B2 pickup and Bollinger B1 SUV.
Also read: The Best Electric Car Stocks To Buy.
The company recently acquired a majority 60% stake in Bolinger Motors in early September for $148.2 million, attracting questions from investors about the funding for the deal and the potential dilution of existing shareholders as the EV company issued new shares to fund the deal. The same questions were raised after the acquisition of ELMS.
However, the rally in MULN shares following yesterday’s announcement is a clear sign that investors are willing to overlook the dilution of existing shareholders if the company continues to progress towards ramping up production and future profitability.
Mullen Automotive said that the ELMs acquisition will fast-track the production of the three SUVs, which will now be produced in Indiana, shortening the production timeline by a year. As a result, the company expects to start producing its Mullen Class 1 and Class 3 commercial vehicles in 2023, with the Mullen Five hitting the markets in 2024.
Still, many questions abound as to whether Mullen will be successful in the highly-competitive EV market, even as industry veterans such as Tesla face multiple challenges that saw the company miss its production and sales targets for Q3 2022.
Mullen Automotive is still a long way from starting production of its EVs, and a lot could happen next year and in future. Despite the optimism expressed by the company’s CEO, David Michery, only time will tell if the company will manage to hit its ambitious production targets next year.
*This is not investment advice.
Mullen Automotive (MULN) stock price.
The Mullen Automotive (MULN) stock price rallied 16.38% to trade at $0.3957, rising from Wednesday’s closing price of $0.3400.
