Arrival (NASDAQ: ARVL) is an Electric Vehicle manufacturer based in London, who focus on building all-electric Buses and Vans. 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 2021 that they had entered a partnership with Uber to develop the Arrival Car, a purpose-built vehicle to target the ride-hailing and car-sharing industry. However at this stage, the company is in a pre-revenue phase and expects costs to continue to climb.
Arrival Stock has sunk 49% in the past month, highlighting the unforgiving nature of the market right now. So is Arrival Stock oversold? And what is the Arrival Stock Forecast on Wallstreet?
This article will breakdown everything investors need to know about Arrival stock forecast.
Why Wallstreet targets imply upside on Arrival’s Stock Forecast
Firstly, across the board of 3 Wallstreet analysts the general consensus is a Buy. The average 12 month price target is $16.89 share which represents an upside of 332%. The most recent target was from UBS analyst Steven Fisher in December 2021. The analyst has a Neutral rating and $10 price target on Arrival Stock. Fisher views the company’s approach to the electric bus and van market as “unique” but expects a careful ramp-up this year.
Cowen analyst Jeffrey Osbourne noted to investors in April 2021 that Arrivals Micro-factory approach was unique, in particular the leveraging of vertical integration and robotics.
Considering ARVL’s poor trading performance over the past month, we may see analysts take a defensive approach and lower their valuations in 2022. However, its worth noting that even the companies lowest valuations from the Street implies more than double upside from its current trading lows. This is something to consider when determining whether a stock is oversold.
What peaked interest in Arrival stock in 2021?
Firstly, the interest in Arrival stock is driven by the companies developments in the Ride sharing market. 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. In December, Arrival reached a milestone as the company began trials of the EV Bus.
“We’ve seen a strong interest in the Bus this year, specifically from governments who are looking to upgrade their public transportation networks, in order to achieve their zero-emission pledges. We’re partnering closely with governments, cities, and operators to build infrastructure solutions and seamless mobility services for local communities to support their clean energy targets.”said Franck Dessenis, Vice President of Bus Platform, Arrival.
Financial forecasts for Arrival Stock
The financial outlook of Arrival has been under fire, as the companies initial targets set in November 2020 are unlikely to come to fruition. Arrival forecasted 2022 annual revenue to break the $1 Billion mark with the sale of Buses and commercial Vans, however analysts expect Arrival to only generate $56.89 Million.
Looking long term, 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.
In addition, the companies long term strategy to focus on Microfactories and vertical integrating will aim to lower costs in the long run.
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 has eventually slumped reaching lows of $2.91 a share in January this year. This has been an all too common trend for SPAC investors following the completion of highly anticipated mergers.
If we compare these lows to the pre-merger trading heights of $37.18 a share we can conclude the stock has been accompanied by significant volatility and a deteriorating investor sentiment.
Summary of the Arrival Stock Forecast
The current Wallstreet valuation remains well above the current trading price, suggesting analysts see room for Arrival Stock to run in 2022.
However, the Arrival Stock Forecast remains in tug-a-war between the bulls and the bears. The Bulls argue that the EV Bus, Van and Ride Hailing market remains relatively untouched and Arrival have an lucrative opportunity to capitalise in Europe.
However, the company is yet to generate any revenues and the bears struggle to compensate the companies current valuation. Until Arrival begins deliveries, Arrival Stock will likely struggle to reverse investor sentiment without upcoming catalysts.
Do you agree with the Bull or Bear thesis? Let us know in the comment section below.
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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