With over 6.6 million electric vehicles (EVs) being sold worldwide in 2021, the global EV industry is estimated to grow swiftly over the next five years, showing a CAGR of 22.6%. This growth rate implies a total EV market value of $802.81 billion in 2027.
That’s due to the increasing demand for low emission vehicles and government support via subsidies and tax rebates should serve as key growth catalysts. Consequently, EV manufacturers should be in a solid position to capitalize on the industry’s long-term growth.
In this article, I will be analyzing two EV stocks, Mullen Automotive, Inc. (MULN) and Workhorse Group Inc. (WKHS), from a quantitative and qualitative point of view, to determine which one is currently a better pick.
Founded in 2014, MULN is a California-based development-stage EV company that produces and distributes EVs. It also operates a digital platform known as CarHub that offers AI-powered solutions for buying, selling, and owning a car. Founded in 2007, WKHS is a technology company, headquartered in Loveland, Ohio, that designs, produces, and sells EVs in the US.
Year-To-Date (YTD), shares of MULN have plunged 44.5%, and WKHS is up 0.46%.
Click here to checkout our Electric Vehicle Industry Report for 2022
Recent Developments
On February 7th, Mullen Automotive stated that it had reinforced its liquidity position with $4 million in funding. Fresh funds were received through a combination of the initial drawdown of $2.5 million under a $30 million equity line from Esousa and debt financing from present shareholders. Over the past two months, Mullen has already got around $40 million thanks to its EV program. David Michery, Mullen CEO, concluded, "This financing represents one of several financial avenues that the company is pursuing to address the growth and demand for our electric vehicles."
On March 1st, Workhorse Group signed a multi-year supply agreement with GreenPower to promote the development and release of medium-duty Class 4 step vans into the North American segment. Under the terms of the deal, GreenPower will deliver 1,500 GreenPower EV Star Cab and Chassis beginning in July 2022. Workhorse plans to launch the commercialization of its Class 4 W750 step vans in 2023.
Recent Financial Performance
On February 14th, Mullen Automotive disclosed a 10-Q filing for the quarter ended December 31st, 2021. The company hasn't recognized any considerable revenues to date because it is presently still in the development phase.
On the expenses side, MULN's General & Administrative expenditures came in at $12.9 million in the three months ended December 31, 2021, implying a 336.93% year-over-year growth amid increases in professional services, marketing, and payroll-related costs. The company's Research and Development expenses were $1.16 million, up 123% compared to $0.52 million in the fourth quarter of 2020. As a consequence, Mullen Automotive's net loss rose by 482.63% on a year-over-year basis to $36.46 million.
Finally, the company's liquidity position remains weak, with reported cash on the balance of $0.61 million and total debt of $19.1 million. Even with a recently raised $4 million, the company may face liquidity difficulties, considering its cash burn rate of $14.71 million as of three months ended December 31st, 2021.
On March 1st, Workhorse Group released its fourth-quarter earnings report. In Q4, the company's revenue stood at ($2.0) million compared to $0.7 million in the fourth quarter of 2020, caused by a decrease in volume and an increase in vehicle returns and allowances in connection with the recall of C-1000 vehicles. Not surprisingly, the company missed the Wall Street consensus by $2.07 million.
Furthermore, Workhorse's fourth-quarter net loss has been reported at $156.1 million, compared to a net income of $280.5 million last year. As a result, the company revealed Non-GAAP EPS of ($0.82), missing consensus by $0.67. The company ended the quarter with about $201.6 million in cash and cash equivalents.
For the current quarter, Wall Street projects WKHS's EPS to increase 88.19% year-over-year to ($0.12), while its notable revenues of $5.90 million analysts anticipate seeing in the third quarter of 2022.
Comparing Options Market Sentiment
Let's take a look at the July 15th, 2022 option chain for both MULN and WKHS to define options market sentiment by comparing the calls/puts ratio. In MULN's case, the open calls/open puts ratio at the $4.00 strike price comes in at 49.14x, implying a strong bullish options market sentiment. When it comes to WKHS', the open calls/open puts ratio at the $5.00 strike price stands at 16.19x, showing a relatively weaker bullish market sentiment.
Bullish Options Bets Placed On MULN Stock
The options, which expire on April 14th, 2021, saw increased call buying on Friday. The open interest for the $10.00 calls rose by 6,641 contracts to a total of 8,287 open contracts (source: barchart.com). A buyer of those calls would need the stock to rise to $10.23 by the expiration date, a gain of about 252% from MULN stock’s current price.
The Bottom Line
In my opinion, Mullen is a better investment than Workhorse at the moment. Even with a struggling liquidity position, the overall MULN financial looks relatively better, especially considering Workhorse's deteriorating top line and net loss figures. Finally, options traders are actively placing bullish bets on MULN stock, and the overall long-term options market sentiment is bullish for MULN, indicating a share price appreciation.
MULN shares were trading at $3.64 per share on Monday morning, up $0.74 (+25.34%). Year-to-date, MULN has declined -30.40%, versus a -6.44% rise in the benchmark S&P 500 index during the same period.
About the Author: Oleksandr Pylypenko
Oleksandr Pylypenko has more than 5 years of experience as an investment analyst and financial journalist. He has previously been a contributing writer for Seeking Alpha, Talks Market, and Market Realist.
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