Today, one high-profile stock that’s taking a knee is Arrival (NASDAQ:ARVL). Currently, ARVL stock is down more than 25% at the time of writing. Indeed, any time a given stock loses more than a quarter of its value in one trading day, investors ought to investigate.
For this manufacturer of electric vans and buses, being in the electric vehicle (EV) space has generally been a good thing. At least, thus far this year. This de-SPAC (special purpose acquisition company) surged from its initial public offering (IPO) reference price of $10 per share to as high as $37 on the backs of outright manic sentiment in the EV space earlier this year.
However, along with other de-SPAC companies and the broader EV sector, Arrival has hit some roadblocks. Including today’s roughly 25% decline, ARVL stock is now down to $13 per share, a rather dramatic drop from its peak.
It should be noted that sector-leading Tesla (NASDAQ:TSLA) is down 11% currently. Accordingly, the entire EV sector appears to be getting hammered today. However, Arrival also has some company-specific news driving its share price lower. Let’s dive into what investors are looking at.
ARVL Stock Plummets on Earnings Report and Forward-Looking Forecast
Yesterday, Arrival reported earnings after market close. The stock price initially dropped 18% in after-hours trading. However, this decline continued into today and has been exacerbated further.
A pre-revenue company, Arrival’s earnings reports don’t usually provide much useful information from a numbers perspective. However, investors in ARVL stock tend to pay closer attention to the outlook management gives moving forward.
In this regard, things aren’t looking too rosy for Arrival from here.
The company’s outlook for EV volumes and revenue next year has taken a significant hit. The company notes it expects “significantly lower vehicle volumes and revenue” next year, as a result of delays impacting the timing of van production next year. Additionally, the company moved the construction timeline of one of its micro factories to 2023 from 2022.
These delays are certainly not what investors were hoping for. On top of these announcements, Arrival also pointed out that additional costs may be incurred to de-risk production. These include bringing certain assembly and logistics functions in-house.
That’s a lot of bad news packed into one report. However, perhaps the company is doing well to rip the band aid off right now.
Whether this massive correction turns out to be a near-term dip, or simply the continuation of a longer-term trend that will continue, remains to be seen. However, for now, ARVL stock is one with a lot of negative momentum.
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.