Mullen Automotive Inc (NASDAQ: MULN) jumped as much as 10% on Tuesday after announcing a new agreement with Pape Kenworth – one of the leading commercial vehicle dealers in the United States.
Pape Kenworth currently has a footprint in 9 states and employs 1,500 technicians across 815 service bays and 150 locations in total.
A sales and service agreement with it will, therefore, help the EV company meaningfully expand its commercial dealer network.
Mullen Automotive has teamed up with six other franchise dealers to unlock fleet opportunities for its commercial electric vehicles in recent months.
Still, MULN stock price has been a big disappointment for investors in 2024.
Why is Pape Kenworth a big deal for Mullen stock?
Mullen and Pape Kenworth are convinced that collaboration will help ramp up commercial EV adoption.
The innovative lineup of the California-based company includes Mullen ONE and Mullen THREE; both of which are US safety standards compliant.
Additionally, the two commercial electric vehicles are eligible for several state and federal incentives that may help lower costs for fleet customers as well.
David Michery – the chief executive of MULN said in a press release today:
Pape Kenworth’s extensive reach and expertise in the commercial vehicle industry will play a crucial role in introducing Mullen’s commercial EVs to a broader market.
Still, our market expert Crispus Nyaga is bearish on Mullen stock and even expects the EV company to be the next Fisker that announced bankruptcy in June.
Mullen shares remain a risky investment
Shares of Mullen Automotive continue to wave several red flags.
To begin with, the stock has enacted a 1-for-100 reverse stock split to remain listed on Nasdaq.
Moreover, the financial performance of the electric vehicles firm has been abysmal.
MULN has reportedly generated $16.8 million in revenue in the nine months ending June but is yet to recognize that revenue.
Over the same period, the EV company has lost $326 million which translates to a huge improvement from a $806 million loss a year ago – but is still concerning since it’s now left with $4.0 million only in cash, including cash equivalents.
Mullen Automotive has not been particularly prudent with its M&A strategy either.
The company spent $148 million on the Bollinger Motors acquisition in 2022 and another $240 million on buying Electric Last Mile Solutions.
In comparison, its market cap currently sits at $428 million only.
These factors made our expert Crispus Nyaga warn that Mullen could even file for bankruptcy by the end of 2024 as it can’t raise funds via share sale and a weak income statement limits its chances of securing debt financing as well.
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