- Mullen Automotive says it will strive to save $170 million over the next year.
- MULN shares rise 2% in Monday trading on new cost-saving strategy.
- Mullen's stock has fallen 70% this year.
- The electric vehicle company aims to sell 100 commercial units in April.
The actions of Mullen Automotive (MULN) rose 2.75% on Monday as the California-based electric vehicle (EV) maker unveiled a new cost-savings strategy to streamline its operations. Chief Executive David Michery and other officials expect the new plan to reduce costs by $170 million over the next year as Mullen focuses on optimizing its commercial vehicle segment.
Mullen rose 2.75% to $4.11 at the close, but was already up more than 6% in the previous session. The S&P 500, Dow Jones and Nasdaq ended the day virtually unchanged, with only the Nasdaq gaining 0.03%. The other indices fell approximately the same.
Mullen News
Mullen has put all his efforts into increasing sales in his commercial segment. CEO Michery listed three parts of the strategy:
- Prioritize short-term revenue and reduce non-commercial initiatives
- Consolidation of Troy and Irvine engineering offices
- Expand the national network of commercial distributors
“Momentum is increasing and we have transactions with fleets of various sizes and vocations,” said Brad Sigmon, vice president of Randy Marion Automotive Fleet Operations, Mullen's partner as a commercial dealer. “Building on March transactions, our goal for April is to move 100 commercial EV units from Mullen.”
By consolidating certain initiatives and ceasing some non-core parts of the business, Mullen expects to save $170 million in operating expenses over the next four quarters. That figure does not take into account the two most recent quarters, which ended in December and March. Instead, it represents a savings of $170 million when compared to the 12 months ending September 30, 2023.
More specifically, Mullen's statement reads: “Reductions in operating cash flows are estimated to be approximately $69 million and capital spending will contract by $101 million over the next 12 months compared to the company expense during the last fiscal year.”
The cost cuts come at an important crossroads for the company, which could need more financing this year to meet its production goals. CEO Michery has at least hinted to shareholders that he wants to stop the dilution of MULN shares in 2024, focusing instead on raising debt.
The company is focused on sales of its Mullen ONE delivery van and the Mullen CAMPUS and Mullen THREE chassis cabs.
Mullen Stock Forecast
Mullen shares are down 70% so far this year and 99% in the last year. Following its last reverse stock split last December, MULN has continued to slide as prior warrants were exchanged for common stock, putting downward pressure on the share price.
There is no reason to believe that Monday's gains will last. The only constant in MULN's history is its downward trend. It is the type of stock that should not be held in the long term. However, opportunistic bulls could enter the fray if MULN manages to break above the 21-day SMA near $5. Resistance lies at $6.36 and $6.95.
MULN daily chart
Mullen Automotive FAQ
What is Mullen Automotive?
Mullen Automotive is a publicly traded EV company headquartered in Brea, California that often uses outside partnerships to manufacture its vehicles. The company was founded in 2014 and currently sells self-designed electric delivery vehicles. In addition to its commercial offerings, Mullen plans to begin manufacturing its Mullen FIVE EV crossover in late 2024 or early 2025. Mullen Automotive went public on the NASDAQ market through a reverse merger in late 2021.
Who is the team behind Mullen Automotive?
David Michery has been the CEO of the company since he founded and incorporated it in 2014. The current company comes from the merger of CODA Automotive and Mullen Motor Cars through acquisition. Michery is accompanied by Chief Financial Officer Jonathan New, Chief Commercial Officer John Schwegman and President of the Automotive Division Calin Popa.
What vehicles does Mullen Automotive currently offer?
Through a partnership with Randy Marion Automotive Group, Mullen distributes its Mullen One delivery van, which has an electric range of 110 miles. Through an agreement with a Chinese manufacturer and distributor based in Ireland, the company also distributes the Mullen-GO Commercial Urban Delivery EV in Europe. In July 2023, Mullen will begin commercial production at its Mississippi facility of its Class 3 EV Cab Chassis long-haul truck for immediate delivery. Thanks to its 60% stake in Bollinger Motors, Mullen will also benefit from the company's B1 SUV and B2 pickup truck, as well as other commercial vehicles in the future. Production of the Mullen FIVE crossover is not scheduled until late 2024, but reservations are now being accepted.
Why is MULN stock trading at such a low price?
Mullen has been diluting its shares since going public in late 2021. This is because the company still has little operating income and no profits. Shares have fallen more than 99% since the company's reverse merger in November 2021, and rapid dilution is the main culprit. Taking into account Mullen's 1-for-25 reverse stock split on May 4, 2023, Mullen had 33,338,727 shares outstanding on September 30, 2022, but 126,281,274 shares on March 31, 2023. The company is authorized to sell up to 200 million shares.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
