The shares of micro-cap EV manufacturer Mullen Automotive (MULN) have been in the spotlight on some of Reddit's most popular stock forums. Shares have moved from near the $0.70 mark at the end of February to nearly $3.00 today (though they’ve still come nowhere near to recapturing their Nov. 2021 high of $13.00+ per share).
Because of its low share price and high volatility, Mullen can be considered the penny stock of the moment. According to the company's management, though, there’s a lot of long-term promise for Mullen's shares.
MULN Is Trading Like A Meme Stock
Mullen's shares behaved much like a meme stock during late February and the first couple weeks of March. However, the stock’s surge does seem to be at least partially grounded in fundamentals - that’s a departure from the normal meme-stock trend, which sees shares move solely thanks to buzz, momentum, or short-squeeze potential.
Renewed focus on Mullen has been driven by the company's announcement regarding the development of next-generation, solid-state polymer batteries. Mullen says its technology is a major advance over the current lineup of lithium-ion batteries available for EVs today.
The stock was also put on many investors’ radars at the end of February, when CarBuzz magazine praised Mullen’s FIVE model in one of its articles. According to the article, even though Mullen is a company with a market cap of less than $100 million, it is the “real deal.” The authors believe Mullen’s vehicles can stand up to models from EV giants such as Tesla, Rivian, and Lucid (which currently sport market caps of 925B, 40B, and 42B, respectively).
Since receiving this positive press, Mullen's stock has recorded a very significant daily trading volume, based on its modest float. The average trading volume over the last ten days was recorded at almost 250 million per day, while MULN’s float is only 4.53 million.
Strong buying has caused Mullen's share price to soar, although it still has got a long way to go if it is to re-reach its IPO price, near $13.
Mullen’s Nov. 5, 2021 IPO date proved unfortunate for the company, to say the least. In the weeks and months that followed, growth and tech stocks got pummeled due to investors’ concerns about inflation and rising interest rates. MULN shares tumbled over 90% during this period.
A Short And A Long-Term Vision
Mullen shares have made exorbitant gains in recent weeks, and MULN is still a high-volatility penny stock. However, Mullen shares have also shown strong, non-meme-like resilience. Many investors have entered positions with a mind towards long-term investment rather than short-term trades.
With Mullen stock's newfound popularity on Reddit and Fintwit discussion forums (see the chart below), demand mobilized by FOMO seems to be on the rise as well. Even after weeks of buzz, Mullen is still in the top 5 trending stocks on Reddit, putting it ahead of several wildly-popular meme stocks, such as AMC.
For long-term investors, buying into Mullen at current levels may end up paying off big-time. However, the company certainly faces high execution risks. Mullen is still at a very early stage of its business; it’s planning to start production of its model FIVE at its newly-purchased Mississippi plant in 2023 - and deliveries are not expected until 2024.
There’s plenty of promise in the global EV market, which is expected to reach one trillion dollars and grow at a CAGR of more than 23% by 2026. But the road to reaching consistent production can be a winding one. Supply chain disruptions, labor shortages, and high inflation are only some of the many macro risk factors that may affect the output of companies such as Mullen Automotive.
But, given their advanced battery technology, their presence in the U.S. domestic market, and their active management strategy, there’s an argument to be made that Mullen will be a relevant player in the EV market in the foreseeable future.
(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting Wall Street Memes)