Don’t Buy the Hype with Mullen Automotive
Mullen Automotive (NASDAQ:MULN) had itself quite the week as the EV startup stock gained more than 60% during the bullish reversal from the NASDAQ index. If you haven’t heard of Mullen Automotive before, you aren’t alone. It’s a small EV startup that is pre-revenue and pre-production, with its FIVE crossover EV set for production in 2023 at the earliest. Mullen rose to fame when it won the award for the Top SUV Zero Emission Vehicle at November’s Los Angeles International Auto Show.
So what caused Mullen’s run this past week? The company made some headlines when Yahoo Finance covered the stock as a new potential contender in the increasingly crowded EV sector. Mullen has also been making some headlines lately with its solid-state polymer cell battery, which is believed to have a range of over 600 miles when fully charged and a 300 mile range after an 18 minute fast charge.
But so what? The company won’t have any vehicles on the road until 2024, and as we all know, a lot can happen in two years. After gaining 60% last week it still only has a market cap of $100 million, and keep in mind that shares are still down over 77% during the past 52-weeks. Rather than invest in stocks like Mullen, here’s two other long-term plays I’d rather keep my eyes on.
Nio ($4.15|3.49%)
For those who have read my previous articles, you’ll already know I am bullish on Nio. The stock has been pummeled this year, and even after it gained nearly 40% this past week, shares are still down 37% year to date. Even after the recovery, Nio is a growth stock that is trading with a price to sales multiple of 4.7. For comparison, Tesla ($162.11|12.05%) has a price to sales multiple of 16.7.
To say Nio’s stock is undervalued right now is an understatement. The Chinese government just confirmed it would be taking a step back from its regulatory crackdowns, and supporting companies that trade on international exchanges. Nio is set for one of its biggest years to date with three new vehicle models, a new production plant, and laying the groundwork for global expansion. If you were to say Nio would be trading under $20 per share last year you would have been laughed out of the room. And yet, here we are.
Tesla ($162.11|12.05%)
If this seems obvious, it is. Just don’t overthink it when investing in EVs. Sure, there are a lot of legacy automakers coming for Tesla, but very few of them have made the switch fully to electric. Tesla snapped out of its recent funk last week, and just like that is back over $900 per share. There were also a couple of significant headlines to close the week. First, CEO Elon Musk tweeted that he is currently working on Part 3 of the Tesla Master Plan. This is significant because each Part of the Master Plan has hinted at where Tesla is moving to as a company. For example, Part 2 cited that Tesla would be rolling out its FSD technology to its entire fleet of cars by Part 3.
Second, Morgan Stanley analyst and noted Tesla bull, Adam Jonas, reiterated his outperform rating for the stock and its $1,300 price target. Jonas also mentioned for the first time that he believes one of Tesla’s next moves is to enter the aviation industry through eVTOLS. If that is confirmed by Tesla or in Part 3 of the Master Plan, we can say with conviction that Tesla has mastered the EV sector before other automakers have even arrived to compete with them.
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