Arrival Share Price Could Go to Zero as Cash Burn Rises

Summary:
• Arrival share price has crashed like a stone as concerns about the company’s future remain. The stock plunged by more than 17% on Wednesday

Arrival share price has crashed like a stone as concerns about the company’s future remain. The stock plunged by more than 17% on Wednesday and reached an all-time low of $0.4100. It has plunged by more than 95% this year, giving its market valuation at about $300 million. At its peak, the firm was being valued at more than $11 billion.

Arrival could go bankrupt

Arrival is one of the many companies attempting to replicate Elon Musk’s success with Tesla. The company is building electric vans, buses, and cars as it seeks to become a leading player in the auto industry. 

Arrival is not selling any cars yet. Instead, it is spending millions of dollars researching and refining its products before it starts manufacturing. For example, the firm spent $1.6 billion to set its microfactories, which it hopes will be useful when it starts producing cars. 

Arrival is running out of cash. It now has $513 million in cash and an additional $300 million at-the-market platform. However, its market cap and daily trading volume has made it difficult to raise the ATM cash. It expects to end the year with between $160 million and $200 million in cash.

The company is also prioritizing its American business because of the recently passed Inflation Reduction Act. 

Arrival share price crashed as the company made plans for capital raising to fund its production. The challenge is that interest rates are rising, which will make it difficult for the firm to raise debt financing. It is also difficult for the company to sell more stock. The company’s CFO said the following about this:

“But in order to hard tool the L Van, we need approximately $150 million, which we assumed would be available to us under the ATM program. Without proceeds from the ATM, we do not have this option.”

Therefore, I believe that Arrival will likely go bankrupt in the coming months. It will not be the first EV company to go out of business. For example, Electric Last Mile Solutions recently filed for bankruptcy and it got acquired by Mullen Automotive.

Arrival share price forecast

Arrival stock price has had a painful fall from grace. The shares traded at $36.57 in 2021 as most investors were looking for the next Tesla. Since then, it has been in a freefall that has seen it crash by almost 98% from its all-time high. 

On the four-hour chart, the stock has moved below all moving averages while the Awesome Oscillator has moved below the neutral level. Therefore, the stock will likely continue falling as demand evaporates. A move above the resistance at $0.55 will invalidate the bearish view.