Inbound stocks tumble amid production, cost concerns (NASDAQ:ARVL)

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Arrival (NASDAQ: ARVL) shares fell double-digits on Thursday after the company’s full-year guidance reflected lower production volumes, continued losses and the need to raise capital.

For the second quarter, the company recorded an EBITDA loss by $89.6 million, compared to $56.2 million the previous year, as capital expenditures increased. After ending the quarter with approximately $513 million in cash, management announced steps to cut costs and establish an At The Market platform to sell up to $300 million of stock as a way to access to “capital needed to meet business priorities through 2023”.

The focus on cost reductions comes just days after a Financial Times report that bus and car projects are on hold to preserve capital.

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

For the second half, Arrival (ARVL) expects an adjusted EBITDA loss in the range of $175-195 million, more than the company had previously forecast for the full year despite the limitation in guidance investment at 40 to 60 million dollars.

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

“We have 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,” said CEO Denis. Sverdlov. “We are excited to be moving closer to vehicle production at our first-ever micro-factory in just a few weeks – a time we believe will fundamentally change the automotive industry.”

While the company reaffirmed production plans to begin in the current quarter and touted memorandums of understanding and orders “worth more than $6 billion in potential revenue,” the company did not anticipates no revenue this year. The revenue shortfall is a far cry from the more than $1 billion revenue forecast for 2022 ahead of the company’s SPAC IPO.

Stocks fell 8.6% shortly before the market opens on Thursday.

Learn more about the details of the latest quarterly report.