Despite the ongoing chip shortages and supply chain disruptions, the electric vehicle (EV) market continues to grow exponentially. Notably, the global EV sales stood at 603,000 in January 2022, representing an 87% year-over-year increase, with a market share of 10% for January 2022.
Furthermore, rising demand for EVs and favorable government policies should enable the global EV industry to grow at a CAGR of 22.6% between 2020 and 2027, reaching $802.81 billion in the terminal year. Consequently, EV manufacturers should benefit from the industry's tailwinds.
Keeping that in mind, today, I’ll analyze and compare two EV stocks, Mullen Automotive, Inc. (MULN) and Hyzon Motors Inc. (HYZN), to determine which one presents a better buying opportunity.
MULN is a development stage EV company that manufactures and distributes EVs. It also owns a digital platform known as CarHub that provides AI-powered solutions for buying, selling, and owning a car. HYZN produces hydrogen-powered commercial vehicles and fuel cell systems. The company produces medium and heavy-duty trucks and buses.
Year-To-Date (YTD), shares of Mullen Automotive have dipped 55%, and HYZN has decreased 1.7% over the same period.
Recent Developments
On February 7th, Mullen Automotive declared that it had raised additional cash of $4 million to strengthen its liquidity position by combining the initial drawdown of $2.5 million under a $30 million equity line from Esousa and debt financing from current shareholders. The company has already got about $40 million under its EV program.
On February 15th, Morgan Stanley analyst Courtney Yakavonis initiated coverage of Hyzon Motors. The analyst believes that the company is positioned to capitalize on the adoption of hydrogen fuel cell trucks, but the competition is “fierce.” The firm rated HYZN at “Equal-Weight” with a price target of $7.
Recent Financial Performance
On February 14th, Mullen Automotive released a 10-Q filing for the quarter ended December 31st, 2021. The company hasn't made any material revenues to date because it is still in the development stage.
When it comes to expenses, Mullen's General & Administrative expenses stood at $12.9 million in the three months ended December 31, 2021, up 336.93% year-over-year because of increases in professional services, marketing, and payroll-related expenses. Its Research and Development costs totaled $1.16 million compared to $0.52 million in the fourth quarter of 2020. As a result, the company's net loss increased to $36.46 million, signifying a massive year-over-year increase of 482.63%.
Finally, Mullen Automotive ended the year with cash on hand of $0.61 million and total debt of $19.1 million. Even with a newly raised $4 million, its liquidity position remains challenging, especially considering the cash burn rate of $14.71 million as of three months ended December 31st, 2021.
On March 23rd, Hyzon Motors released its fourth-quarter earnings report. In Q4, Hyzon Motors' total revenue was reported at $5.09 million, substantially missing Wall Street's consensus by $23.26 million. The lower-than-anticipated revenue was caused by geographic and product mix shifts to Asia. Its net loss rose 140% year-over-year to $32.44 million in Q4. As a result, HYZN's GAAP EPS has been reported at ($0.12), missing analysts' estimates by $0.05.
Hyzon’s Adjusted EBITDA came in at ($36.7) million versus ($3.44) million in Q4 2020. It is also important to note that the company plans to deliver up to 300-400 vehicles mainly towards the second half of the year.
Currently, Wall Street anticipates Hyzon's EPS to be ($0.08) in the first quarter of 2022. Besides, analysts project HYZN to generate revenue of $4.49 million in the current quarter.
Bullish Options Bets Placed On MULN Stock
The open interest levels for May 20th, 2022, $3.00 calls increased notably during the March 25th trading session. According to data provided by Barchart.com, there was a purchase of 5,173 contracts to bring the total to 7,634. It’s a moderate bullish bet, with a transaction dollar value of about $336,000. A buyer of the calls would need MULN stock to rise to $3.65 by the end of May, representing an upside potential of about 55% from current levels.
Conclusion
I believe that MULN is a better pick than HYZN at current levels. Although HYZN started delivering its fuel cell vehicles, it reported lower-than-expected top and bottom lines, which may limit its upside potential in the forthcoming weeks. At the same time, any milestone achieved by MULN towards commercialization can be positively reflected in its share price. Finally, options market trades suggest positive market sentiment for MULN stock.
MULN shares were trading at $2.67 per share on Monday morning, up $0.32 (+13.62%). Year-to-date, MULN has declined -48.95%, versus a -4.43% 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.
Mullen Automotive vs. Hyzon Motors: Which EV Stock is a Better Buy? StockNews.com
