While the S&P 500 and Dow Jones Industrial Average are down nominally today, shares of Arrival (ARVL 3.97%) are falling precipitously. The company missed third-quarter 2021 expectations and reported a loss per share of $0.07 -- slightly lower than the $0.06 loss that analysts were expecting. But it's not only that: Investors are likely pumping the brakes after learning of the company's increasingly cautious near-term outlook.
As of 10:22 a.m. EST, shares of Arrival have slid 25.2% lower.
Dashing investors' hopes that the company would soon be producing vehicles, Arrival acknowledged in its Q3 2021 press release that the company "has revised its Microfactory [smaller local production facilities] rollout, and now expects significantly lower vehicle volumes and revenue in 2022." The update comes to the dismay of investors who had been expecting vehicle rollouts to occur sooner.
In an investor presentation from November 2020, Arrival had forecast electric van and large electric van production to begin around this time next year, contributing to revenue of $1 billion for 2022. Elaborating on its more circumspect outlook, Arrival noted in the press release that: "Bus and Van production volumes in 2022 are expected to be modest because 2022 is the first year the Company is starting production and it is now expecting a more conservative ramp in each of its first three Microfactories."
The updated outlook that Arrival provided in its Q3 2021 earnings report is a good reminder for investors who have been swept up in the fervor of SPAC deals that the road to growth is often not as simple as it seems in investor presentations. Of course, the delay in production doesn't mean that Arrival's growth prospects are now negated, but it does mean that investors should be aware of the risks and be prepared to wait, if necessary.