Investors watching Mullen Automotive (NASDAQ: MULN) will know that it just partnered up with Rapid Response Defense Systems and this is good news. Rapid Response Defense Systems is a leading government contractor specializing in partnerships with small businesses. It was just awarded a new contract to provide the US government with light-duty EVs over the next few years. The contract is worth roughly $2.7 billion over the next 60 months and could significantly boost Mullen Automotive's revenue. The GSA Fleet Vehicle Purchasing Program average more than 50,000 new vehicles per year, and Mullen is uniquely positioned as the only manufacturer with a class-1 option.
“With the federal government’s strong interest in electrifying a growing portion of its vehicle fleet, Mullen’s commercial portfolio is very well positioned," said RRDS SVP – Federal Fred Bouman. “Mullen’s Class 1 EV cargo van launches this year and will be the only class 1 EV van in the market. It is 100% electrified, making it a strong fit for federal government business.”
Mullen Automotive Executing On Its Plans
This latest development indicates that CEO David Michery is executing plans and building momentum for the business. This opportunity came to light due to Ron Dixon, the new hire and head of government sales. Mr. Dixon was head of government sales at GM so he comes to the table with experience and contacts within the industry.
The caveat is that Mullen is not the “exclusive” partner as it alleges in its press release but one of the perhaps many partners that will meet the government’s EV demand. The takeaway is that Mullen has developed yet another visible path to revenue that will help launch it to success once production is begun. Regarding production, the company teased the market with a video and pictures of its class-1 van sitting in the Tunica facility, but there is no word yet on when production will start.
“RRDS is all about providing solutions to the federal government,” said Mullen’s Manager of Government Sales Ronald Dixon. “ … In addition, RRDS will be a key vehicle supplier to the General Service Administration in an awarded 5-year multibillion-dollar vehicle contract. We are focused on selling our EV products to the federal government and view this relationship as a strategic step in accomplishing that goal.”
Before this news, Mullen revealed a partnership with Loop Industries and Menzies Aviation. Mullen and Loop have been exploring ways to grow business together, and Menzies Aviation is one path to that goal. Menzies, the world’s largest airport services provider, is exploring using EVs and Loop’s fleet services tools. The test is running at LAX and could result in sales and an affirmation of business for Mullen and Loop.
Mullen's Deadline Is At Hand
Mullen investors will also know that March 6th is the deadline for shares to surpass the $1 mark. This threshold to maintain a NASDAQ listing may lead to a reverse stock split if the company can not cross it. The next news will probably be a request to extend the deadline, which gives the company another 6 months to meet listing requirements.
The reverse stock split was approved by shareholders and will come at the board's discretion. There is speculation such a move could spark a short squeeze, but the only guarantee is volatility. The short interest in this stock is very high, over 50%, and has it set up for a squeeze, but without good news to sustain a rally, the short sellers are more likely to reposition at higher prices than to walk away from this market.
The Technical Outlook: Mullen At A Bottom, No Rally Yet
Mullen Automotive shares appear to be at the bottom, but there is not enough meat to the story to sustain a rally yet. At best, the stock will continue to move sideways as bulls and bears fight. A rally may start when the company announces production, vans, and sales. The rally may be substantial if it gets a firm order from one of its many potential buyers.