Arrival (NASDAQ: ARVL) is an Electric Vehicle manufacturer based in London, United Kingdom. The company first peaked investor interest after announcing the reverse merger with SPAC company CIIG in November 2020. The merger was able to raise $660 million in gross proceeds for the business to fund its expansion strategy. The company announced in May they will be entering a partnership with Uber to develop the Arrival Car, a purpose-built vehicle to target the ride-hailing and car-sharing industry. At this stage, the company is in a pre-revenue phase with its first products to commence production in Q4 of 2021. This article will breakdown everything investors need to know about ARVL stock forecast.
Table of contents
What is the consensus on Wallstreet for ARVL stock
Firstly, across the board of 3 Wallstreet analysts the general consensus is a Buy. The average 12 month price target is $30.17 share which represents an upside of 51%. Cowen analyst Jeffrey Osbourne noted to investors in April that Arrivals Micro-factory approach was unique, in particular the leveraging of vertical integration and robotics. Although Wallstreet coverage is limited due to the short time ARVL has been trading publicly, we will likely see more institutions weigh in over the next 6-12 months as the company gains traction with retail investors. Here are the following targets from large institutions:
Barclays 6/3/2021 – Analyst Brian Johnson initiated coverage with an Overweight rating and a price target of $25 a share. The analyst noted the strong case for the electrification of urban vans and buses. It is clear Barclays analysts see upside in ARVL stock over the next 12 months.
Cowen 4/5/2021 – Analyst Jeffrey Osbourne initiated coverage with an outperform rating on the stock. The firm is yet to list a valuation or price target at this time.
Why are investors excited about Arrival stock?
Firstly, the interest in Arrival stock over the past month has been surrounding the companies expansion into developing a Ride sharing vehicle with Uber. However, the business is also targeting a vastly lucrative market with the development of Electric Buses and Vans. As of November 2020, The EV innovator Arrival has signed contracts with total order value up to US $1.2 billion. The contract with UPS is the order for 10,000 vans with the option for an additional 10,000. The company estimates the total addressable market for Electric Buses and vans alone is $430 Billion.
Financial forecasts for Arrival stock
The financial outlook of Arrival is impressive, highlighting the benefits of their diversified vehicle class portfolio. In November 2020, Arrival forecasted 2022 annual revenue to break the $1 Billion mark with the sale of Buses and commercial Vans. By 2023-24, the company expects to have 4 main revenue drivers. That being Bus models, Large Vans, Commercial Vans and their Small vehicle platform. The company forecasts the Van models to generate majority of revenue over the next 3 years.
Arrival forecasts annual revenue of $14.1 Billion and a gross profit of $3.7 Billion by 2024. The above forecasts illustrate the lucrative nature of the emerging Electric Vehicle market, especially the sub markets of Vans and Buses which have not yet been saturated with competition. In addition, the companies focus on Microfactories to enable low CAPEX costs alongside vertical integration strategies is a positive note for long term investors.
What are the risks associated with Arrival stock?
Since ARVL stock had its official debut on the 25th of March we can see the stock initially slumped reaching lows of $13 a share in April this year. This is a common trend after the completion of highly anticipated SPAC mergers. If we compare this to the pre-merger trading heights of $37.18 a share we can conclude the stock has been accompanied with heightened volatility.
However, since the initial downturn the stock price found support at low levels and has bounced back to an equilibrium of $19 a share. We will likely see over the next few months more institutions weighing in on the current valuation of ARVL stock. This is important to note as larger institutions can have a large impact on the current trading price, especially on stocks that have little to no coverage.
Summary of the Arrival stock forecast
In summary, the current Wallstreet consensus is bullish and is currently playing in favour of the bulls. In addition, the strong revenue forecasts does illustrate the potential markets Arrival can break into over the next 3 years. However, investors should note the current volaitility of the EV submarket and will need to factor this into their own risk strategy or tolerance.
Written by Tyger Fitzpatrick, Founder of Youth Investment Group
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The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
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