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Arrival bankruptcy: ARVL stock tumbles as EV maker runs low on cash

By David Burrows

10:58, 9 November 2022

NASDAQ market in New York. Photo: Getty
Arrival is listed on the NASDAQ market in New York. Photo: Getty

Life doesn’t get much easier for troubled EV maker Arrival (ARVL). Shares in the Nasdaq-listed but UK-based company have continued to slide – falling from $0.42 to $0.38, following a worrying third quarter trading update from the company.

Arrival revealed a loss for the period of $310.3m, compared to a loss of $30.6m in the third quarter of 2021.

This Q3 loss in 2022 included non-cash impairment charges and write-offs of $232m

Adjusted EBITDA loss for the period was $73.3m, compared to an adjusted EBITDA loss of $45.9m in third quarter of 2021

In Q3, the cash balance reduced approximately $180m. Primary uses of cash were related to capitalized R&D and factory spend, salary expenses, working capital spend, research and consultancy spend, and other operational expenses.

Arrival share price chart

Essential restructuring

Arrival’s troubles in trying to make the most out of its remaining capital have been well documented.

As of end of September 2022, the company had existing cash and cash equivalents of approximately $330 million. The board conceded that this balance was not sufficient to cover twelve months of operations.

As a result, in late October, Arrival announced a plan to restructure its business significantly to extend their cash runway and to focus resources on a family of products for the US market.

This focus shift to the US and away from the UK market - where its first EV vans were supposed to be delivered – is expected to result in severe job cuts.  While specific numbers have not be provided yet, Arrival said the restructuring was expected to have a sizable impact on the company’s global workforce, predominantly in the UK.

US30

39,810.10 Price
-0.460% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 21:00 (UTC)
Spread 2.2

US100

18,665.60 Price
+0.640% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 21:00 (UTC)
Spread 1.8

US500

5,310.80 Price
+0.110% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 21:00 (UTC)
Spread 0.8

DE40

18,747.30 Price
+0.090% 1D Chg, %
Long position overnight fee -0.0221%
Short position overnight fee -0.0001%
Overnight fee time 21:00 (UTC)
Spread 8.0

Challenging year

In a statement yesterday, Denis Sverdlov, Arrival founder and CEO said: “2022 has been a challenging year for Arrival as well as the entire sector but we are agile in responding to these challenges”.

He added” We will continue to build a small number of Vans in Bicester (UK) while advancing our composite materials, components, vehicle software, autonomous mobile robotics and Microfactory to bring our products to the US market, which has become the most attractive opportunity for Arrival in the mid to long term after the tax credits offered under the IRA became effective”.

“We will use cash on hand of $330m and look to secure new funds to achieve our goals in the US.”

In its statement to the stock market, Arrival said that limited resources and the attractive opportunities of the US market makes developing US products the best use of capital, but this means revenues and margins will come later; not in 2023.

With issues over new funding sources and confirmation of revenues not coming through until after 2023, it appears a pretty bleak backdrop for Arrival right now.

The share price dropped in response  to the Q3 update but the real damage to the stock is more clearly evident over the year.  On 11 November 2021 the stock stood at $14.15 – but has fallen dramatically since to the present $0.38 level.

Arrival will be hoping the drastic restructuring will help the company recover but it is a tall order to turn things round in this economic climate.

At its current depressed valuation might investors be attracted? Seemingly yes , Marketbeat rates the stock as a ‘moderate buy’ right now.  

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The difference between trading assets and CFDs
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You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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