Today, Hindenburg Research published an extensive research on Mullen Automotive and has taken a short position. Hindenburg Research are very detailed with their research, they take them seriously, and back their opinions on researched publicly traded companies by taking taking short positions. I haven't heard or Mullen Automotive until today and was surprised it was even a publicly traded company. Diving into finding out more about the company, it became very clear how finding a truthful information is not a task. There is so much deception and it is not easy to tell what is an honest marketing strategy, and what is a complete lie. That's why I really appreciate the research Hindenburg Research does and shares with the public.
Mullen Automotive is EV manufacturing company, or at least wants to become one. It is a publicly traded company and its stocks trade under the ticker $MULN and its current price is $2.65. When I looked at the stock chart, I could see the overall trend of the price has been downward for a while. The chart showed the price history going back to 2012. This didn't make sense. If it is a new company why would it stock be trading for last ten years. It turns out Mullen Automotive became publicly traded after a reverse merger with Net Element, which used to trade under ticker $NETE. Net Element is or was a company that specialized on mobile payments, but business was failing.
For whatever reason these two companies merge in November 2021. It seems like it was a way for Mullen Automotive to become a publicly traded company without dealing with traditional IPO process. This was a reverse merger, which means private company buys or takes over the publicly traded company. After the merger, the newly merged company started trading as $MULN. It is a legal way of becoming a publicly traded company. However, I do find it to be somewhat deceptive tactic. SPAC has been happening for a while. I guess it is a norm in the markets.
Although, currently the price of the $MULN is at $2.65, around the time of the merger or right after, its price went up above $11. And in a very short time it dropped below $1 too. Short position and especially the research done by Hindenburg Research probably won't help its price either. I will not be taking any positions myself, due to lack of cash at this time. But it will be interesting to watch what will happen to this stock. Markets are crazy, people speculate all the time. Maybe nothing will happen.
If you are going to trade make sure to do your own research. Everything is not always what it seems to be. I look at MullenUSA website and everything looks good, nothing suspicious, another company entering the EV competition. On the other hand, I look at the Hindenburg's research and see a completely opposite story. Feel free to read the full report yourself. This story reminds of the of the deception tactics Nikola Motor's and its CEO utilized to defraud its investors. According to the HR, the company only spend $3 million in Research and Development, but make bold claims about its technology, especially about their solid-state battery technology. They claim their solid-state batteries will be ready for commercial use in about two years. $3 million annual funding for research and develop this technology does seem very little, considering competition in this space. In addition to lack of funding, its claims about testing seems to be not so honest and nothing there is nothing to prove or show otherwise.
HR was able to find out through import records that Mullen Automotive acquired 2 electric cargo vans from Chinese EV manufacturers, while at the same time announcing that they will be manufacturing two types of EV vans. Lol. I guess nothing is wrong with rebranding selling a product that someone else made. But claiming you are the one who is making them doesn't sound right. It looks like this wasn't the first time Mullen utilized such strategy either. Mullen has done similar things before as well, when they rebranded a car and presented as their own when in fact it belonged to another Chinese manufacturer, Qiantu Motors. After the dispute and with Qianty and revelation of this story, this project wasn't realized, and this car didn't happen.
What I found really funny in HR report is the story about Mullen's manufacturing facility. Mullen acquired a facility in Mississippi that was originally built for manufacturing pizza delivery cars but that endeavor failed by the previous owners. So, Mullen purchases this property and claims that they have state-of-art equipment and machinery to manufacture their EV. On their website they show one advanced manufacturing equipment, which was actually a stock photo purchased from Adobe stock images. lol.
How is this even possible? How can a company with so many red flags even be allowed to be traded in public markets? I am not suggesting strict regulations. Just pondering why there are loopholes in the markets that allow such deception of investors happen? Regulators have been talking about crypto markets and how investors should be protected, and they can't even get the stock markets clear of fraud. I am also not suggesting it should be difficult for company to become publicly traded either. I just wouldn't want the markets to be designed to defraud people. Let me know what you think about Mullen Automotive? If you have tried one of their EV cars, please let me know in the comments.
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