Today, investors in UK-based electric vehicle (EV) startup Arrival (NASDAQ:ARVL) are seeing some pretty steep declines. In fact, shares of ARVL stock are currently down approximately 7% at the time of writing. Today’s price action seems to indicate investors are presently looking elsewhere for growth.
However, there are a few catalysts long-term investors in this early stage EV company will like. Various catalysts saw shares of this de-SPAC (special purpose acquisition company) surge from its SPAC initial public offering (IPO) level of $10 to as high as $37 earlier this year on intense momentum among SPAC stocks. However, like many of Arrival’s de-SPAC peers, recent price action has not been favorable of late.
In fact, Arrival has lost more than two-thirds of its market value from its peak. Investors placing their bets on the EV sector appear to be focusing in on the bigger, more established players today. Accordingly, Arrival remains a high-risk, high-reward bet in the world of EV stocks.
That said, let’s dive into two key catalysts that could position ARVL stock for a nice run.
Two Catalysts Are the Key for Investors in ARVL Stock
Investors in ARVL stock are making a bet that this early stage EV company can hit its production targets. Today, executives told investors that the company is on track to begin production of its EV bus and van in 2022.
This is big news, as investors price in the timing of cash flows into their models. Any early stage EV company carries some level of execution risk. Investors betting on ARVL stock are essentially betting on the management team to do what they say they’re going to do. Indeed, this not only means on the production end of the equation but on the demand side as well. Investors are expecting updates on the company’s fulfillment plans for its key van order with UPS (NYSE:UPS). This order is expected to bring in more than $1 billion in revenue for Arrival.
Secondly, investors looking at ARVL stock will have to consider a key announcement the company made last week. Last Thursday, the company announced plans to partner with Microsoft (NASDAQ:MSFT) on developing a cloud-based data platform for EV fleets. Given Microsoft’s backing for this project, many investors have begun to get excited about the technology angle with ARVL stock.
However, again, this comes back to execution. Investors seem to be waiting for tangible results on these projects before jumping aboard. Accordingly, it appears ARVL stock is one that’s likely to be volatile for some time, as investors price in these catalysts alongside operational risk.
On the date of publication, Chris MacDonald did not have (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.
