Mullen Technologies, Inc. (NASDAQ: MULN) might play a dramatic role in the electric vehicle (EV) industry over the coming years by launching an affordable and stylish crossover SUV with innovative solid-state battery technology. Based in California, Mullen’s mission is to democratize electric mobility from the affluent to the average American. Indeed this is an ambitious vision.  It comes with tough challenges to stand up massive manufacturing operations and deliver on its lofty expectations. Established automakers have taken notice, and the contest to take a little aspiring startup to a power player in the automotive industry has already started. The Mullen FIVE crossover has a polymer battery technology which is right in the thick of the fight. Investors will know by 2030, if the FIVE crossover and the company’s proprietary polymer battery technology will push Mullen into an electric vehicle market leadership position.

Bull Case

In a very optimistic scenario, the stock could rise to well over $50 per share by the end of the decade. The bullish case centers around Mullen’s reach into the electric vehicle market and commercial successes in battery technology. The FIVE crossover already has over 150,000 preorders and has the potential to take over a sizable market share north of 5% of the U.S. electric vehicle market. Revenues of $5 billion across 2030 would follow and offer a staggering 138%, five-year compound annual growth rate (CAGR). Improvements to the company’s traveled business trajectory are already apparent as net losses will decrease from $44 million in 2021 to $739 million in 2022 before material vehicle deliveries are reached. A 25% net margin in the bullish case would move to $1.25 billion in net income on $5 billion in revenue.

Assuming a 650 million share count and an extra 150 million to allow for dilution means diluted earnings per share of $8.33. Even factoring a P/E of 25, that could push the stock above $200. This would represent an incredible amount of growth for Mullen.

Base Case

With steady growth, capturing 2% of the U.S. EV market share and the manufacturing of more than 50,000 vehicles per year, Mullen could see its stock price in the $15 – $30 range by 2030. By this time, with a stable base of revenue, it is estimated that revenue will be under $2 billion assuming a moderate growth trajectory with a 76% five-year CAGR.  The company could have similar 5% net margins to viable established automakers which would yield a net income of $100 million. With this and an estimated 150 million diluted shares, that makes for an EPS of $0.67. Put a P/E of 20 on that stock and it could see a realistic price of about $13, which would make for a solid investment return without overly optimistic growth assumptions.

Bear Case

With significant sales and manufacturing setbacks, Mullen’s stock could struggle to maintain above $5 by 2030. Any delays in entering the market for its EVs are likely to be costly as there is a risk of losing critical market segments to competitors. If Mullen can only manage $500 million, with break-even 0% margins  or worse, while potentially increasing its share count of 500 million or so by 2030, there is unlikely to be much in the way of earnings per share. The stock may linger below $5, as risk factors and uncertainties mount up for Mullen.  Without positive earnings, a meaningful valuation is hard to achieve.

Competition from Tesla Inc. (NASDAQ: TSLA) is a big threat to Mullen.  It has a broader range of EVs in production and has established itself as a leader in the industry while Mullen is a small startup. Tesla also has a significantly higher production capacity and revenue compared to Mullen. Both companies aim to leverage technology to improve their vehicles, but Tesla has a demonstrated track record of innovation while Mullen’s solid-state battery technology is still in development. In terms of market position, Tesla has a dominant share of the EV market while Mullen is yet to gain any significant market share. Finally, Tesla has a much higher valuation and is a profitable company, while Mullen is not a profitable company and has a much lower market cap.  Lucid Group Inc (NASDAQ: LCID) is already in trouble.  Is Mullen next? 

Final snapshot

Mullen Technologies’ journey to the top ranks of the electric vehicle space is full of difficulties and obstacles that are out of their control and ones that come from the management’s strategic and operational decision-making.  Its creative approach and product lineup carry the potential to significantly disrupt the status quo, but its ability to do so rests upon its ability to surmount major production and technology hurdles. A $15-25 stock price in 2030 is a reasonable baseline projection, with a wide array of potential variations depending upon how Mullen executes upon the milestones that underlie its strategic objectives. Investors and industry watchers will want to closely watch the company’s planned sequence of new model introductions, production ramp efforts, and battery progress to judge how well it is ultimately faring in bringing its long-range strategy to the physical world.

Mullen’s path to mass electric vehicle production faces risks, but the disruptive potential exists if executed successfully. Reasonable 2030 forecasts range from $0-25 per share, with upside and downside. Potential key milestones to monitor include new model launches, production ramp-up, and battery advancements.  Here is a quantitative snapshot of the 3 scenarios:

	Bull Case	Base Case	Bear Case
2030 Revenue	$5B	$2B	$0.5B
2030 Net Margin	25%	5%	0%
2030 EPS	$8.33	$0.67	$0
2030 P/E Ratio	25x	20x	–
Potential 2030 Stock Price	$200+	$13	<$5

About the Author: Amit Nar can be reached to talk about the interesting world of stocks on discord.

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