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

Mullen Autos struggled with supply and cost issues. Photo: Shutterstock
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EV start-up Mullen Automotive is lead bidder for assets of bankrupt competitor Electric Last Mile Solutions

According to a Bloomberg report, Mullen, listed on the Nasdaq (US100), accepted an offer of almost $100 million for Electric Last Mile. Competing bids must be submitted by October 3 and an auction will take place on October 7.

Assets include a now-inactive former Hummer SUV plant in Indiana.

Mullen Auto has not been shy about making efforts to grow its business through acquisitions. Just over a week ago, Capital.com reported on Mullen Automotive acquired a 60% stake in Bollinger Motors for $148.2 million in cash and stock.

It was hoped that this could provide a much-needed boost to Mullen’s profile as well as his course of action. This was not the case.

Nor did the news that Mullen Auto intends to take over the assets of Electric Last Mile – the stock price has actually fallen to a current level of $0.46. To put this into context, shortly after Mullen Auto’s IPO in November 2021, the stock reached highs of about $16.

At $0.46, the stock certainly looks cheap, but it’s a very volatileile stock in a difficult sector, to say the least.

EV start-ups may at some point enter the ever-changing market, but there’s no doubt that established players like Tesla (TSLA) enjoy a dominant position rgood now.

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

While the increased stake in Bollinger may have signaled ambitious intent, City watchers still harbor concerns about Mullen Auto and that will not have been helped by Mullen Auto’s recent admission that it no longer met Nasdaq’s minimum share price requirements.

Undoubtedly, things can change quickly in this sector – at the start of 2022, Mullen Auto was named the best electric vehicle start-up to watch. Less than a year later, the share price is at rock bottom. But the ink is barely dry on the Bollinger deal and other bidders could still enter the fray for Electric Last Mile.

The increased stake in Bollinger could significantly increase the number of electric vehicles coming to market. And if the bid for the Electric Last Mile assets proves successful, it could bring significant capacity benefits.

But right now, there are quite a few “ifs” – which many market watchers might say are reflected in the low price.

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The fair value of Mullen Autos?

One of the problems with Mullen Auto is that as a new player in this market there are lots of mentions of potential but nothing concrete to look back on.

As Simply Wall St points out, there are not enough data to calculate Mullen’s fair value for valuation analysis.

It will be interesting to watch how an “enlarged” Mullen Autos performs over the next few months.

David Michery, CEO and President of Mullen Automotive, was optimistic about the company’s prospects, insisting that growth through 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 by hard numbers.

Further reading

Karen J. Nelson