Arrival (NASDAQ:ARVL), a British electric vehicle (EV) maker that came public in 2021, rose 17% in overnight trading today after producing its first vehicle. The van, produced in Bicester, England, is just a step toward mass production, but it could save ARVL stock from delisting.
Arrival came public through a special purpose acquisition company (SPAC) in March 2021. At that time it was valued at $13 billion, or $22 per share. It has been trading below $1 per share since early September. The overnight gain brought its price to about 90 cents.
Late Arrival
The initial public offering briefly gave Arrival founder Denis Sverdlov, who owned 76% of the company, a fortune estimated at $10.6 billion. The company’s market cap is now about $500 million. Arrival has raised nearly $630 million since its 2020 launch.
Arrival made big promises to produce lightweight electric cars, vans and buses. It blamed supply chain problems for its failure to start production in the current quarter.
Arrival now says it has figured out how to build “microfactories” that will distribute production close to markets. The company said recently it is in talks to acquire the funds to deliver on this promise.
Promises might have worked well in 2021. But promises are worthless in 2022. Arrival lost about $100 million in the first half of this year and its financial struggles have continued. The company announced a series of cost-cutting moves, but analysts have lost patience.
The company’s microfactories are said to be a radical new method of production. Its designs are allegedly more efficient due to the use of lightweight materials. But its inability to deliver on those promises in a timely manner has led even boosters to write it off.
What Happens Next for ARVL Stock?
If Arrival can get new funding and get a factory into production, it might have a chance. But it’s also possible that chance will come at the cost of zeroing-out common stockholders and recapitalizing the business.
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On the date of publication, Dana Blankenhorn did not hold (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.
