Arrival's (NASDAQ:ARVL) Path To Profitability
We feel now is a pretty good time to analyse Arrival's (NASDAQ:ARVL) business as it appears the company may be on the cusp of a considerable accomplishment. Arrival primarily focuses on the design, assembly, and distribution of commercial electric vehicle vans and buses worldwide. With the latest financial year loss of €83m and a trailing-twelve-month loss of €1.1b, the US$10b market-cap company amplified its loss by moving further away from its breakeven target. Many investors are wondering about the rate at which Arrival will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Check out our latest analysis for Arrival
Arrival is bordering on breakeven, according to the 2 American Auto analysts. They expect the company to post a final loss in 2022, before turning a profit of €681m in 2023. Therefore, the company is expected to breakeven roughly 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 75% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Given this is a high-level overview, we won’t go into details of Arrival's upcoming projects, however, bear in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
One thing we’d like to point out is that Arrival has no debt on its balance sheet, which is quite unusual for a cash-burning growth company, which usually has a high level of debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.
Next Steps:
There are key fundamentals of Arrival which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Arrival, take a look at Arrival's company page on Simply Wall St. We've also compiled a list of important aspects you should look at:
Valuation: What is Arrival worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Arrival is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Arrival’s board and the CEO’s background.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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