Arrival (NASDAQ: ARVL) — manufacturer of commercial electric vehicles from Luxembourg. The company designs and assembles vehicles, plans to deliver them to the whole world, and also relies on its own software, exclusive design and environmentally friendly production. The business was founded in 2015 and went public in 2020 through a Nasdaq listing..
What he earns
The company creates eco-friendly urban electric transport. Now she has three developments:
- A ridesharing vehicle with a load capacity of up to 800 kg and the ability to travel 100-300 km on a single battery charge. Slowly being built in partnership with Uber – the first model should roll off the assembly line no earlier than the third quarter of 2023.
- Van with payload up to 2 tons and battery reserve for 150-340 km. Public testing on the track scheduled for the first quarter of 2022.
- Bus for up to 125 passengers, battery which is enough for a trip of 240-400 km. The first public trials on the track are planned for the first quarter of 2022., and the start of sales in the UK is scheduled for the second half of 2022.
Arrival also creates special software for the convenience of managing and maintaining their vehicles by drivers and fleet owners..
What's wrong
No finished product. Business lives with expectations: all Arrival vehicles are still in development and at best some of them will start testing in 2022 with a limited start of sales at the end of the year. So far, the company's success is based only on promises of a brighter future., and for many investors, this will not be enough.
Cash flows won't last long. According to Simply Wall Street analysts, at the current rate of burning, the company's money will last less than a year, if the rate of contraction of free cash flow continues. In such a tough environment, it is critical for Arrival to launch planned sales in 2022. Otherwise, the issuer will have to increase debt or issue new blocks of shares on the market - both scenarios will be a negative signal for investors.
Crisis of semiconductors and auto industry. The shortage of semiconductors and its negative impact on the automotive sector has not disappeared., and Arrival will be under pressure on par with other electric vehicle and automotive manufacturers in general. Automotive supply continues to lag far behind demand, and in the light of current events in the global economy and politics, this gap, obviously, will be aggravated.
Dynamics of free cash flow for 2021, one thousand dollars
| March | –101 |
| June | –145 |
| September | –154 |
–101
What good
Pays the bills. The company's equity capital exceeds its liabilities by almost four times, and quarterly dynamics of indicators indicate that, that so far, Arrival is in good financial health.
More 75% shares are held by insiders. Three-quarters of the company's total securities are in the hands of employees - this once again confirms, that insiders have significant faith in Arrival's success and remain loyal to the business, where they work. Among institutional investors, the largest share belongs to the American giant BlackRock.
Shares are undervalued. Simply Wall Street stock valuation literally screams about the undervaluation of the issuer's securities: relative to analysts' fair price, Arrival's shares are trading at a discount of over 93%. You can learn more about the evaluation method on GitHub.
Liabilities and equity of the company for 2021, million dollars
| Commitments | Equity | Total | |
|---|---|---|---|
| March | 331 | 836 | 1167 |
| June | 261 | 934 | 1195 |
| September | 252 | 970 | 1222 |
Arrival Ownership Structure
| Insiders | 75,9% |
| Black Inc | 2,8% |
| Capital World Investors | 1,9% |
| FMR Inc | 1,6% |
| American Funds Fundamental Invs A | 1% |
| Capital Group Fundamental Invtrs Comp | 1% |
| American Funds Growth Fund of Amer A | 0,8% |
| Other | 12,4% |
75,90%
What's the bottom line?
Arrival creates socially useful and relevant products, which meet the current demands of society for the environmental friendliness of transport and the removal of the automotive industry from internal combustion engines towards electric motors.
But in the absence of completed developments, which are freely sold and bring real money, investments in the issuer's business remain an aggressive bet on further growth and rely solely on the investor's faith in the future of the company.
Arrival shares are trading at very attractive levels, but don't forget, that at any value, securities always have a downside potential, so the risks need to be calculated wisely.
