Shares of Mullen Automotive (NASDAQ:MULN) are up about 12% following the release of a letter to shareholders. First, the letter addresses the 90% decline in MULN stock since March 31. The company acknowledged that it has received several phone calls and emails about this issue.
At the same time, Mullen believes its share price is trading at a discount to its current cash position. “The Company currently trades at a discount to its current cash position of $135 million or $.038 per share,” said Mullen.
This statement seems flawed, as MULN trades above 3.8 cents, which would mean that it is not trading at a discount. Perhaps they included an extra zero in the $0.038 figure.
Mullen also provided details on its Class 3 commercial electric vehicle (EV), stating that it is “in a position to meet the previously announced objectives for moving first into the production and then sale of our Class 3 commercial vehicles during the quarter ending Sept. 30, 2023.”
Mullen Releases Letter to Address MULN Stock Decline
Later on in the letter, Mullen points out that it had $86.7 million of cash available for operations as of March 31. This would equate to a cash value of 68 cents per share when divided by 126.28 million shares of common stock outstanding as mentioned in the recent 10-Q. The company’s annual meeting of stockholders proxy statement, released on June 12, shows that there were 263.27 million shares of common stock outstanding.
Next, Mullen explains that its book value was $2.08 as of March 31. The formula for book value is shareholders equity minus preferred equity divided by outstanding common shares.
MULN is also trading at a discount relative to its recent acquisitions of Electric Last Mile Solutions (ELMS) and Bollinger Motors. ELMS’ assets were acquired for $105 million, while the 60% stake in Bollinger was acquired for $148.2 million. Meanwhile, Mullen’s market capitalization is hovering around $45 million.
Mullen’s facility in Tunica, Mississippi, will be critical for production, as it has over 120,000 square feet of manufacturing space plopped on 100 acres of land. With 90 patents granted, the company looks to disrupt the commercial EV market.
Mullen did not dive into details surrounding the dilution of MULN, which seems to be a major factor for the price decline.
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On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
