$Mullen Automotive (MULN.US)$Mullen Automotive (NASDAQ:MULN) stock is trending today on news that the electric vehicle maker could be a top bidder for the assets from bankrupt $Electric Last Mile Solutions (ELMSQ.US)$Electric Last Mile Solutions (OTCMKTS:ELMSQ)
when an auction is held on Oct. 7.

After rising in premarket trading, MULN stock has turned southward and is now trading down about 12% on the day at just 35 cents a share. However, the stock is lighting up social media channels and retail investor chat rooms on speculation that the company could acquire much-needed infrastructure from bankrupt Electric Last Mile Solutions once its assets are auctioned off in October.

What Happened

Mullen Automotive has emerged as the leading bidder for commercial electric vehicle company Electric Last Mile Solutions. According to multiple media reports, Mullen could bid as much as $92 million to buy the intellectual property and infrastructure of ELMS. Before running out of cash, ELMS had been well along in the development of a commercial electric vehicle called the "Urban Delivery.

Mullen is reportedly prepared to pay $55 million for the company's assets, including inventory, intellectual property rights and its plant in rural Indiana. The company is also likely to assume $37 million in liabilities and debts, according to the reports. Mullen Automotive has already paid a $5.5 million deposit with the Securities and Exchange Commission (SEC) to be applied toward the purchase of what remains of Electric Last Mile Solutions.

Why It Matters

If all goes according to plan, the purchase of Michigan-based Electric Last Mile Solutions materials will mark the second major deal that Mullen Automotive has pulled off over the last month. Earlier in September, Mullen acquired a 60% controlling interest in Bollinger Motors, a Michigan-based start-up that builds battery-electric commercial trucks and off-road pick-up trucks.

Electric Last Mile Solutions filed for bankruptcy in June of this year, less than 12 months after going public via a $1.4 billion special purpose acquisition corporation (SPAC) deal.

For its part, Mullen Automotive has yet to launch a vehicle since its own 2021 SPAC deal. The Nasdaq warned earlier this month that the company could be delisted because its share price traded below $1 for 30 consecutive days. Mullen's management must boost the share price in the coming weeks or face the ordeal of being delisted.

To regain compliance with Nasdaq, Mullen Automotive's stock must trade above $1 a share for 10 consecutive business days by March 6 of next year, the company has said.

What's Next for MULN Stock

Investors are eagerly awaiting the auction to be held on Oct. 7. The sale of ELMS assets, infrastructure and intellectual property could help Mullen Automotive develop its own electric vehicle. It could also help MULN stock in the long run.

Right now, investors appear to be selling off the shares on worries about the money that needs to be spent to purchase Electric Last Mile Solutions. But in the long term, this could be a smart move.