New World A-Comin'

[Monksdream]

Mullen Auto (MULN) earlier this year was given up for dead. Then the Reddit or WallStreetBets or the Stocktwits gangs decided it was a darling. Then came all the claims about an electric car that has yet to be built from a factory that has yet to be completed will trample all the competitors in the EV sector, including Tesla. That is how these social media outlets operate and will always operate. Wild claims, combined with page after page of penetrating analysis (mostly word salad, in my view) all intended to motivate market participants to buy shares. The more noise they generate that motivates participants to buy shares the more willing those sitting on the fence will step in to buy because, to put it simply, they fear missing out.

I like Warren Buffett's observation of stock market dynamics: in the short run the stock market is a voting machine; in the long run it is a weighing machine. History tells us an exceedingly small percentage of public stock companies have appreciated substantially in value over time periods measured in decades. They have done so for only one reason: financial performance.

With that concept established, let's compare Mullen Auto with three domestic EV makers, Rivian (RIVN), Lucid (LCID) and Fisker (FSR) for the past month. Those three are selling vehicles at present. The challenge the three now face is how soon they will stop burning the cash invested in them and start turning a quarterly bottom line profit, less the usual accounting tricks companies employ to make themselves appear better than they actually are.



Back in March 2020 up to February 2021, which could be characterized as the Robinhood Era or the WallStreetBets Era, take your pick, the three Chinese EV companies, mostly notably NIO (NIO), which ran from 50 cents to over $60, have pretty much flat lined in the past month compared to Mullen Auto.


In my view, what the Voting Machine is saying is that it is easier for Mullen shares to double from its current pricing in the short term than it is for the other six EV companies to double in price in a comparable time period.

That simple. It is really the sole reason why anyone would buy shares on Monday.