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California-based electric vehicle (EV) startup Mullen Automotive (NASDAQ:MULN) is trying to succeed in a crowded field. The company needs a catalyst to get ahead of its competition. So far, however, it looks like Mullen is good at spending money but not at turning a profit. Besides, the company's vehicles don't seem to offer anything that will disrupt the EV market. Consequently, cautious investors shouldn't consider buying MULN stock.

A decade ago, the field of American EV startups was much smaller and less competitive. Today, however, a crowded EV landscape means that newer entrants must stand out and prove themselves. It also helps if they're financially viable.

Unfortunately, it's not enough for Mullen Automotive to want to be disruptive, as this describes pretty much every EV startup nowadays. Unless some major event puts Mullen ahead of its competition, it's hard to envision the company thriving or even existing as a going concern for much longer.

What's Happening with MULN Stock?

It's perfectly understandable if Mullen's long-term investors are feeling disappointed in 2022. After all, MULN stock started the year at nearly $6, only to fall below 30 cents recently.

Even in a tough year for stocks overall, Mullen's share-price loss is particularly severe. It's painful, frankly, to watch Mullen's market capitalization continue to shrink at such a rapid pace.

And by the way, the Nasdaq exchange has sometimes been known to delist stocks that fall below $1 and stay there for a long time. Consider how disheartening it would be if MULN stock gets booted from the Nasdaq and ends up on an over-the-counter (OTC) exchange. It's something that serious investors should think about before jumping into such a high-risk trade.

There's Nothing Special About Mullen Automotive

Even beyond the delisting possibility, there are other reasons for prospective investors to avoid Mullen Automotive. We can start with this worrisome statement from the company, "Since inception, we have incurred significant accumulated losses of approximately $278.9 million, and management expects to continue to incur operating losses over the near future."

That's from a Form 10-Q pertaining to the quarter ended June 30. The statement reprinted above can be found under the section titled, "Going Concern." Also in that section, Mullen Automotive mentions stock-and-warrant sales, valued at $275 million and approximately $43 million.

Of course, these share issuances raise dilution concerns. Investors should also be concerned about Mullen's staggering $128,508,884 net loss during the nine months ended June 30. That's substantially worse than the already worrisome $29,545,621 net loss from the year-earlier period.

As for the company's vehicles, there's nothing so eye-catching that it would actually disrupt the current EV market. Mullen's crown jewel seems to be its FIVE RS sports vehicle. It can accelerate to 200 miles per hour, which will probably get you a traffic citation unless you're driving on Germany's Autobahn speedway.

There also doesn't seem to be anything so unique about Mullen's Bollinger B4 commercial truck that it will put the company ahead of all the other electric truck makers out there.

The Bollinger B4 is lightweight; that's its selling point in a nutshell. Only time will tell whether this distinction will be enough to make Mullen Automotive a threat to its competition in the electrified truck market.

What You Can Do Now

All in all, Mullen's automotive offerings aren't likely to create a substantial economic moat for the company. That's bad news for the investors, as they could definitely use a major catalyst now.

Furthermore, Mullen Automotive's lack of profitability and share-dilution concerns should be deal-breakers for prospective investors. Therefore, it's not a bad idea to stay on the sidelines if you were thinking about buying MULN stock now.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.

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