Mullen Burned Through $66 Million of Cash in Q4
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Shares of Mullen Automotive (NASDAQ:MULN) stock are down by about 8% despite the company reporting a record quarter in terms of production and deliveries.
During the fourth quarter, Mullen delivered a total of 231 vehicles worth $11.9 million. However, Mullen has only submitted an invoice for the deliveries and has not yet recognized the revenue. During January, the electric vehicle (EV) company delivered 260 vehicles worth $8.75 million. Similarly, the revenue for these deliveries has not yet been recognized. Mullen won’t recognize the revenue until Randy Marion Automotive’s (RMAs) return provisions expire.
“At our Tunica plant, we continue to increase our vehicle production capacity with two vehicle lines running concurrently for both Class 1 and Class 3 vehicle assembly,” said CEO David Michery. “Since starting production, we have invoiced for 396 vehicles, totaling $17.3 million.”
Mullen is on the hook to buy back any of its new vehicles not sold by RMA after 12 months at RMA’s discretion, according to the agreement between the two companies.
MULN Stock: Mullen Burns Through $66 Million of Cash, $81 Million Remaining
For the quarter, Mullen’s net loss improved to $63.99 million compared to a loss of $378.46 million a year ago. The improvement was mainly due to Mullen not incurring any initial recognition of derivative liabilities expenses, which totaled $255.96 million a year ago.
Loss from operations also improved to $59.40 million from $73.61 million. This was a result of lower general and administrative expenses, although research and development expenses almost doubled.
Meanwhile, Mullen burned through $66.75 million of cash, which is calculated by adding its net cash used in operating activities and purchase of equipment, the only figure in Mullen’s net cash used in investing activities. This is concerning, as Mullen only had $81.51 million of cash and cash equivalents as of Dec. 31. Using the fourth quarter cash burn would mean that Mullen’s cash would sustain it for 1.22 quarters. Excluding the purchase of equipment would mean it has enough cash for 1.36 quarters.
In the past, Mullen received much of its capital from agreements with lenders that involved dilutive warrants. However, these agreements have greatly harmed MULN stock, which is down by over 99% YOY. The company has also been slow in receiving payments for its vehicle sales.
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On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.