Shares of Mullen Automotive (NASDAQ: MULN) have been beaten up over the past year for good reasons. The slow roll into production, massive dilution, and fears of under-capitalization have all taken a toll. However, while threats remain, the company continues to build momentum and could be on the brink of turning a corner.

Given its progress, Mullen should be logging a significant ramp in revenue over the coming quarters, which could reinvigorate the bulls while providing bears a reason to quit selling. 

1) Mullen Addresses Short-Selling: Fights For NASDAQ Review

The most significant risk to Mullen shareholders now is delisting from NASDAQ. Delisting would hurt investor confidence and make it even more difficult for Mullen to find financing, among other troubles. Mullen has tried to maintain compliance with 2 reverse stock splits that have yet to provide the desired results, largely due to short-selling. Short-sellers had their interest above 15% at the end of August, which is not remarkably high for an EV OEM, but there are concerns about illegal short-selling. 

Coincidentally, several major institutions, including State Street, BlackRock, and Geode Capital Management, closed most of their positions after Mullen announced an investigation into illegal short-selling. The closed positions do not indicate wrongdoing but appear suspicious, given the allegations.

As it is, the company has filed charges naming broker/dealers, including TD Ameritrade and Charles Schwab (NYSE: SCHW), which has helped the market find a bottom. The bottom is still below NASDAQ's $1.00 threshold but well above the $0.10 floor reached following the 1st reverse split. 

2) Mullen Shifts Gears, Starts Buying Back Shares 

Among Mullen’s efforts to gain market support is the announcement of a $25 million share repurchase authorization. The repurchases began soon after the 2nd reverse split and have tallied more than $5.5 million in shares since. The repurchases equal about 4% of the existing market cap, and about 16% is left under the authorization.

There is no guarantee the company will continue to repurchase shares, but it is a sign of confidence that should not be ignored. The company does not have unlimited cash; the board or CEO David Michery would unlikely spend the money to buy back shares if the business was heading toward disaster. 

3) Production of the Mullen Class-3 Truck has Begun 

Production of Mullen’s class-3 truck has begun. The start of production was celebrated with an open house event at the manufacturing facility and an update on plans to ramp production. The target is to build 3,000 trucks per year per shift with a single-shift active now.

Production may ramp to maximum by EOY and open a significant revenue stream for the business. The MSRP is $68,500, more than $200 million per year at 3,000 vehicles annually before dealer profit is removed. The class-1 truck will also begin production this year, and deliveries are expected by the end-of-year. 

4) Mullen Automotive Is Gaining Momentum 

It is slow to build, but Mullen Automotive is gaining traction. The August open house resulted in at least 1 truck order, and more are expected. The August order is from NRTC Automation, an industrial manufacturer and automation services specialist, and good for 3 trucks. This is a small order but may lead to more, and there are more than just 1 on the books. The company also received an order for 30 Mullen-Go’s in Ireland, and both of these orders are on top of a standing order from Randy Marion for 1,000 class-3 trucks. The takeaway is that Mullen is building trucks, ramping production, and has orders for the trucks it’s making, so momentum should continue to build. 

5) Mullen Automotive Expands Its Battery Technology 

Mullen Automotive is working to advance its battery production capability and vehicle lineup. The latest news in this quarter is the acquisition of assets belonging to Romeo Power. Those assets include equipment, IP, and inventory for producing batteries and battery packs. The assets were purchased for $3.5 million, a small sum given the opportunity to improve operations at the Monrovia facility.

Mullen will move the assembly line equipment, IP, and inventory to that facility to expand capacity and reduce costs. The goal is to build batteries in-house and advance EV battery technology, including solid-state. 

The Technical Outlook: Mullen Is Trending Lower 

Shares of Mullen are trending lower, but there are 2 interesting details for bulls to consider. The first is that volume continues to ramp higher, suggesting an ever-increasing interest in the stock. The 2nd is that MULN shares are oversold and showing a bullish crossover that has led the market higher before. In this scenario, shares of Mullen should be expected to spike higher; the question is how high they will get and if the short-selles will let them stay high.