Short selling data can help active investors avoid catastrophic losses. Short sellers tend to be well-informed, high-conviction traders. If they’re shorting a stock, there’s usually some major risks to be aware of.
In this report, we are going to look at the short selling data on Mullen Automotive Inc (MULN:US). Mullen is an American company that owns and partners with several synergistic businesses that are all working towards the same goal of creating clean and scalable electric vehicles (EVs) and energy solutions. Founded in 2014, it was incorporated by CEO David Michery as a successor company from the acquisition of CODA Automotive and Mullen Motor Cars. The company is listed on the Nasdaq and currently has a market capitalization of $636.7 million.
Mullen Automotive: Short Selling Data
Looking at the short selling data on Mullen, we see a number of things that concern us.
The first is that short interest is very high. At present, 55.98 million shares are on loan. That represents about 23.3% of the free float.
The second is that the number of shares on loan has rocketed higher recently. At the beginning of March, only 5.5 million shares were on loan here. Since then, the figure has risen more than tenfold. This tells us that the shorters have been ramping up their downside bets.
A third concern is that utilization is 100%. Utilization is a measure of demand from short sellers. A reading of 100% tells us that demand for the stock on the short side is extremely high right now.
New Short Selling Report
Mullen Automotive has recently been targeted by short seller Hindenburg Research.
In a scathing report published on April 6, 2022, Hindenburg claimed:
- The two electric cargo vans that Mullen claims it will be manufacturing are actually Chinese EVs rebranded with a Mullen logo. Hindenburg says import records show the company recently imported two vehicles from China, one of each model.
- Mullen has major production hurdles. Hindenburg says the company has no EPA certificates for its vans – a requirement to sell vehicles in the US that often takes 12-18 months.
- Orders for Mullen’s vehicles are questionable. Hindenburg says one order, for 1,200 vehicles (worth $60 million), came from a small cannabis retailer with only one location and a new online store that says it prefers to ship via USPS.
- Mullen recently misrepresented test results for its solid-state battery technology and also fabricated a joint venture in relation to its battery technology.
- Mullen’s Founder, Chairman and CEO David Michery – who has a background in entertainment – has led five failed penny stock companies prior to Mullen. According to the short seller, two had their securities registrations revoked by the SEC, two terminated their securities registrations, and the last one merged with a speculative gold mining company.
The short seller concludes its report by stating: “We have seen this story before, but Mullen strikes us as one of the worst. With echoes of Nikola, Lordstown, Kandi and Ideanomics, we think Mullen is just the latest in a long line of EV hustles.”
Short sellers don’t always get it right. However, Hindenburg has had plenty of success on the short side in the past. Given the short seller’s track record, we think caution is warranted towards Mullen Automotive stock right now.