With the ongoing electrification of the transportation sector, the number of new electric vehicles (EVs) on the world’s roads stood at over 6.6 million in 2021, representing a 100% year-over-year increase. Besides, EV market share more than doubled in 2021, rising from 4.11% in 2020 to 8.57%.
According to Allied Market Research, the global EV industry is estimated to grow at a CAGR of 22.6% between 2020 and 2027, hitting $802.81 billion in the final year. Consequently, EV manufacturers should be in a solid position to benefit from the industry’s tailwinds.
In today’s article, I intend to analyze and compare two EV stocks, Mullen Automotive, Inc. (MULN) and Nikola Corporation (NKLA), to find out which one presents a better buying opportunity at current levels.
Based in Brea, California, MULN is a development stage EV company that engages in the manufacturing and distributing of EVs. It also owns a digital platform known as CarHub that provides AI-powered solutions for buying, selling, and owning a car. Nikola is an Arizona-based company that engages in the development of electric semi-trucks. The company also operates the energy business.
Year-To-Date (YTD), shares of Mullen Automotive have plunged 74%, and NKLA has dropped 24% over the same period.
On February 7th, Mullen Automotive declared that it had improved its balance sheet with $4 million in funding. It was due to a combination of the initial drawdown of $2.5 million under a $30 million equity line from Esousa and debt financing from current shareholders. Over the past two months, the company has already received approximately $40 million because of its EV program. Mullen CEO David Michery commented, “This financing represents one of several financial avenues that the company is pursuing to address the growth and demand for our electric vehicles.“
On January 6th, Nikola Corporation announced that it had partnered up with Saia LTL Freight. According to the collaboration, Saia has the option to purchase or lease 100 Nikola Tre heavy-duty battery electric vehicles (BEVs) after the satisfactory completion of a demonstration program. Under the terms of the demonstration program, three BEV trucks will operate across the Saia network. This program is expected to start in the first half of 2022.
Recent Financial Performance
On February 14th, Mullen Automotive revealed a 10-Q filing for the quarter ended December 31st, 2021. The company hasn’t generated any meaningful revenues to date as it is still in the development stage.
On the expenditure side, Mullen’s General & Administrative expenses were $12.9 million in the three months ended December 31, 2021, showing a 336.93% year-over-year growth due to increases in professional services, marketing, and payroll-related expenses. The company’s Research and Development costs came in at $1.16 million compared to $0.52 million in the fourth quarter of 2020. On the grounds of this, the company’s net loss increased to $36.46 million, implying a vast year-over-year increase of 482.63%.
Finally, Mullen Automotive reported cash on hand of $0.61 million and total debt of $19.1 million. Even with a recently raised $4 million, its liquidity position looks weak, especially taking into account the cash burn rate of $14.71 million as of three months ended December 31st, 2021.
When it comes to Nikola Corporation’s fourth-quarter earnings report, the company did not generate any revenues during the quarter, thus missing Wall Street consensus by $2.19 million. However, NKLA disclosed a Non-GAAP EPS of ($0.23), beating analysts’ estimates by $0.08.
The company’s Adjusted EBITDA loss came in at $90.39 million versus $65.5 million in Q4 2020, caused by a higher net loss figure. Consequently, its net loss has been reported at $159.42 million, up 12% on a year-over-year basis. On the positive front, the company intends to deliver 300 – 500 Nikola Tre BEV trucks in 2022. It also looks forward to completing successful pilot testing of Tre FCEV alpha trucks with AB, TTSI, and others.
For the next quarter, analysts project NKLA’s EPS to decrease 8% year-over-year to ($0.33), while its first meaningful revenues of $37.88 million Wall Street expects to see in the third quarter of 2022.
Comparing Options Market Sentiment
Looking at the October 21st, 2022 option chain for both MULN and NKLA, we can measure options market sentiment by analyzing the calls/puts ratio. In MULN’s case, the open calls/open puts ratio at the $2.50 strike price comes in at 10,41x, implying a bullish options market sentiment. When it comes to NKLA, the open calls/open puts ratio at the $8.00 strike price stands at 3.37x, showing a relatively weaker bullish market sentiment. However, the calls at the $9.00 strike price outweigh the put options about 21 to 1, with 617 open calls to 29 open puts.
The Bottom Line
I believe that NKLA is a better investment than MULN at the moment. That’s because NKLA looks closer to commercialization, which can be positively reflected in its share price. Besides, NKLA has better financials. Even though MULN’s options market sentiment looks relatively greater, I think it has only a speculative character, while NKLA’s positive sentiment reflects the successful start of the commercial stage.
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MULN shares were trading at $1.62 per share on Monday morning, up $0.27 (+20.00%). Year-to-date, MULN has declined -69.02%, versus a -11.23% rise in the benchmark S&P 500 index during the same period.
About the Author: Oleksandr Pylypenko
Oleksandr Pylypenko has more than 5 years of experience as an investment analyst and financial journalist. He has previously been a contributing writer for Seeking Alpha, Talks Market, and Market Realist. More...
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