Two days after reporting Mullen Automotive’s (NASDAQ: MULN) short interest was growing despite a string of good news, the company released more good news that has upward pressure building for this market. The news is a deal with Ireland’s Newgate Motor Group for the i-Go. The i-Go is an EU-specific final-mile delivery vehicle that Mullen Automotive acquired the rights to in October, only one month ago. Newgate Motor Group is one of Ireland’s leading automotive dealerships and represents brands like Renault (EPA: RNA), Kia (OTCMKTS: KIMTF), and Mercedez-Benz (OTCMKTS: MBGAF). The company has reached throughout the United Kingdom and into the mainland EU as well.
The deal gives Newgate Motor Group rights to market, sell, distribute and service the Mullen i-Go in Ireland. The company has agreed to buy 500 per year, with initial delivery set for December 20, 2022, which is this year. What this means for Mullen is an immediate revenue stream and one that comes into play more than a year before it begins production of its own line of vehicles. As a strategy, it’s a brilliant win for Mullen Automotive in all aspects as it brings cash flow and brand recognition while paving an inroad to the EU. On the other hand, Newgate will use the first deliveries for demonstration and sales purposes.
Mullen Automotive Strikes While The Iron Is Hot
Mullen Automotive was a quiet player during the EV boom of 2020 and 2021, but it was a strategic quiet time that led to the current string of good news. The deal to sell i-Go’s in Ireland is a natural progression to the company’s acquisition of i-Go rights and fits hand-in-hand with the hiring of CCO John Schwegman. Schwegman comes from GM and is in charge of the commercial line of vehicles, including the i-Go, and plans to manufacture a line of Class 1 through Class 6 commercial vehicles. The i-Go is also slated for launch in Germany at the same time.
“This is a highly strategic partnership for Mullen, with Newgate being one of Ireland’s most recognizable dealers for new and used vehicles; it brings us an incredible opportunity to enter the commercial EV market in Europe with a very successful retail group,” said David Michery, CEO and chairman of Mullen Automotive. “We are currently working closely with Newgate on the importation, registration, and licensing requirements for the successful import and distribution of the I-GO into Ireland and the United Kingdom.”
In regard to the short interest, the short interest on the first of November was nearly 18% or up about 4% in the preceding two weeks and more than 10% on a month-over-month basis. This is not the highest short interest on Wall Street by any means, but a sufficiently large amount of activity to have pushed price action down to recently set low levels. Now, with the company’s momentum building, there is a significant risk for the bears of a short-squeeze and, at the very least, the potential for a short-covering rally.
The Technical Outlook: Mullen Automotive Continues To Bottom
Mullen Automotive began to bottom in February 2022 when it began to execute its growth strategy. The bottoming continued in October when the price action bounced from a new low, driven by multiple good news stories, and that bottom is being confirmed again today. The new i-Go deal had the stock up as much as 15% in early premarket trading, and gains are holding into the regular session. The upswing is also showing support at a higher level than before, which is good news for the bulls and compounded by the indicators. Both MACD and stochastic are rolling into bullish crossovers convergent with the new support level and point to some additional upside in the near term at least.
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