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Thursday was a good day for heavily shorted Mullen Automotive (MULN) stock. The shares surged by more than 75% after the company delivered some welcome news about its giant order with Randy Automotive. They peaked at a split-adjusted high of $18.74, its highest point since December 5th.
In a statement, Mullen Automotive said that it had delivered 38 Mullen 3 trucks to Randy Automotive. Those deliveries were in part of a 1,000 order that Randy made in 2022. Now, Mullen intends to manufacture 150 more vehicles at its plant in Tunica. It also expects to make about 3,000 vehicles in 2023.
The latest delivery news was welcome since there have been concerned about Mullen’s balance sheet and its manufacturing capability. Mullen has denied all these concerns and insisted that it had adequate resources to fund development. It has also initiated a $25 million share buyback program.
While investors cheered the latest Mullen Automotive news, many traders who commented on its statement were negative. At press time, the Tweet had 255 comments, with most of them being highly critical.
A keen look at the comments shows that most people believe that the news was a PR stunt meant to pump the stock. Other users complained about their losses as the Mullen Automotive stock crashed. The shares have plunged by over 99% in the past 12 months, according to SeekingAlpha.
Some commenters believe that Mullen Automotive decided to deliver this news ahead of a capital raise, possibly in 2024. Mullen has not confirmed whether it intends to raise cash any time soon.
Mullen Automotive and other Tesla wannabes have come under intense pressure in the past few months. Most of them are burning substantial sums of money, meaning that they could file for bankruptcy or dilute their shareholders.
Mullen Automotive is still burning loads of cash as it aims to boost its production. According to SeekingAlpha, it ended last quarter with over $214 million in cash and no long-term debt. While this is good money, the company also had over $308 million in net loss.
The post Traders blast Mullen news as a PR stunt as MULN stock slips appeared first on Invezz
