ARVL - Arrival shares slump amid production cost concerns

Arrival ( NASDAQ: ARVL ) shares dropped by double-digits on Thursday after the company’s full year forecast reflected lower production volumes, persistent losses, and the need for capital raises.

For the second quarter, the company posed an EBITDA loss of $89.6M, accelerating from $56.2M in the year prior, as capital expenditures picked up. After ending the quarter with approximately $513M in cash, management announced actions to reduce costs and establish an At The Market platform to sell up to $300M of stock as an avenue to “capital needed to deliver business priorities through 2023.”

The focus on cost-cuts comes only days after a Financial Times report that bus and car projects are being paused to preserve capital.

“The Company expects lower production volumes in 2022 compared to previous estimates,” a company statement on Wednesday said. “These changes allow the Company to operate the business through at least 2023 without needing to raise additional capital, other than through the ATM, and prepare the Company for growth.”

For the second half, Arrival ( ARVL ) expects Adjusted EBITDA loss in the range of $175-195M, more than the company had previously forecast for the full year despite reining in capex forecasts to $40-60M.

Still, management stressed the importance of progress in production due in coming weeks.

"We’ve made recent strategic decisions that will allow us to start production this quarter in Bicester ( UK ), deliver our first vehicles to UPS this year, and start production in Charlotte in 2023," CEO Denis Sverdlov said. "We are excited to be drawing closer to producing vehicles in our first ever Microfactory in a few weeks - a moment that we believe will fundamentally change the automotive industry."

While the company reaffirmed the production plans to begin in the current quarter and touted MOUs and orders “worth over $6B in potential revenue”, the company does not anticipate revenue this year. The lack of revenue is a far cry from the over $1B in revenue forecast for the 2022 prior to the company’s SPAC IPO.

Shares fell 8.6% shortly before Thursday's market open.

Read more on the details of the latest quarterly report .

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