Amid a soft opener to the final week of January, electric vehicle startup Arrival (US:ARVL) announced that it will lay off half its workforce. According to Reuters, the job cuts will help halve its cash operating expenses, a critical measure as the EV manufacturer struggles with a liquidity crunch that threatens its existence.
In November, Arrival stated that while it had enough cash to fund its enterprise into the third quarter of 2023, it warned that it might fall short in the fourth. “We’re actively engaged in capital raising … we’ve had some preliminary discussions with a handful of parties,” Chief Financial Officer John Wozniak stated at the time during a post-earnings call.
The headcount reduction announcement comes amid a difficult time for the burgeoning EV manufacturing industry. Thanks to broader initiatives aimed at tackling climate change to the sharp rise in cost of hydrocarbon fuels, demand for EVs – particularly for electric vans which falls under Arrival’s main specialty – blossomed considerably, attracting numerous competitors.
Still, the arena now appears crowded. Turning up the pressure cooker is sector leader Tesla (US:TSLA), which earlier this month slashed prices globally on its EVs, with some models being discounted by as much as 20%. Fundamentally, analysts whom Reuters interviewed perceived Tesla’s move as a shot across the bow against smaller, cash-strapped rivals in addition to legacy automakers pivoting toward electrification.
“Competition is coming and they are responding with price cuts,” said Thomas Hayes, chairman and managing member at Great Hill Capital.
Nevertheless, Monday’s announcement – which led to ARVL stock shedding 3.82% for the session – can’t overshadow the dramatic rise in bullishness toward Arrival. On a year-to-date basis, shares gained nearly 117% of equity value. Much of these gains appear to focus on short-squeeze speculation.
Per data from Fintel, the short interest of ARVL stock recently hit 22.27% of float. Further, its short interest ratio stands at 5.05 days to cover. Presently, Fintel grades Arrival’s Short Squeeze Score as 77.23. To explain, “[t]he number ranges from 0 to 100, with higher numbers indicating a higher risk of a short squeeze relative to its peers, and 50 being the average.”
Notably, the short shares availability – or the number of shares of ARVL stock available to be shorted at a leading prime brokerage – demonstrated extreme volatility over the last 72 hours. Three days ago, Arrival’s short shares availability hit 300,000. Around the close of Monday’s open market session, this metric slipped to 1,000.
Finally, the short borrow fee rates for ARVL stock remain both elevated and volatile. Going back to the Jan. 17 session, Arrival’s lowest short borrow fee was 61.68%. At its highest, this stat reached 221.32%. As of the latest read, it stands at 83.43%.
This article originally appeared on Fintel
ALERT: Take This Retirement Quiz Now (Sponsored)
Take the quiz below to get matched with a financial advisor today.
Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests.
Here’s how it works:
1. Answer SmartAsset advisor match quiz
2. Review your pre-screened matches at your leisure. Check out the advisors’ profiles.
3. Speak with advisors at no cost to you. Have an introductory call on the phone or introduction in person and choose whom to work with in the future
Take the retirement quiz right here.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Editors' Picks
