Analysts Expect Breakeven For Arrival (NASDAQ:ARVL) Before Long

With the business potentially at an important milestone, we thought we'd take a closer look at Arrival's (NASDAQ:ARVL) future prospects. Arrival engages in the research and development, and design of commercial electric vehicles (EVs), EVs components, robotic manufacturing processes for EVs, and associated software in the United Kingdom, the United States, Russia, and internationally. On 31 December 2021, the US$1.2b market-cap company posted a loss of €1.1b for its most recent financial year. As path to profitability is the topic on Arrival's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Arrival

Consensus from 3 of the American Auto analysts is that Arrival is on the verge of breakeven. They anticipate the company to incur a final loss in 2023, before generating positive profits of €334m in 2024. So, the company is predicted to breakeven approximately 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 84% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

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We're not going to go through company-specific developments for Arrival given that this is a high-level summary, but, bear in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 38% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

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 pertinent factors you should further research:

1. 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.

2. 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.

3. 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.

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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.