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The Case for Arrival - Round #2

KCGI merger, Dieter, Recession Proof sales, $40k per vehicle in government incentives, and insane under-valuation compared to peers all make this Arrival story extremely juicy for us.

Photo by Hans Eiskonen / Unsplash
This article was 90% authored and 100% researched by the user DogshitHandGrenade from Reddit. He was kind enough to give us permission to repost the content in article form on . Thank you.
Editor's note: This article has not aged well. Arrival has gone into bankruptcy protection.

Here is a summary about Arrival: It's an EV company based in the UK and the US. It focuses on B2B vehicles with a new manufacturing approach: the micro-factory. For more information about that, please read our previous article on the subject:

Arrival: The EV bet of the century?
If you have been an investor in Arrival and owned Arrival stock within the last year, chances are, you lost a lot of money. Is it your fault? We are inclined to say no. On the contrary, we still believe it might be the EV bet of the century.

What the hell has happened in the past week?

Arrival's stock price has been falling like a rock. There is a list of reasons why we suspect this is occurring. Some of these will be explained in greater detail later on.

  1. Macro trends – Market-wide sell-offs – Retail EVs (Rivian, Lucid) reporting terrible sales
  2. Retail traders are selling because of the 4/14 reverse-split
  3. The largest holder, Kinetic, continues to sell around 10-20k shares per day
  4. Antara Capital is selling its positions to mitigate risk
  5. All the selling above is causing retail to panic and cut losses
  6. All the selling above is causing funds to hit their risk tolerance and cut losses

The preceding list is just a sick-cycle carousel that drives the price lower and lower. The list has artificially set the stock price too low. But when does it stop? How does it stop?... The selling will stop once there comes a reason to buy. Right now, this selloff is going under the radar, and ARVL has not done a good job of showing the reasons to buy its stock. I suspect this is by strategy; they are waiting to share this message at a more opportune time (I'll explain). In the meantime, we'll do our best to share the good news on why someone would want to buy ARVL.

ARVL stock today is criminally undervalued compared to peers

We are explicitly NOT comparing ARVL to Lucid, Rivian, or Tesla. We are comparing it to other SPAC start-ups that are in pre-production. Canoo (Symbol: GOEV) is probably the most closely relevant peer, and ARVL is trading at 7.5x lower and has 4x the cash-in-hand. This imbalance is due to all the reasons above and is an artificial adjustment new traders can take advantage of.

22 April 2023 market end stats

SYMBOL Company Name Market Cap ($m) Cash ($m) Short of Float
ARVL Arrival $46 $205 9.28%
GOEV Canoo Inc. $352 $51 15.54%
MULN Mullen Automotive, Inc. $392 $107 13.68%
RIDE Lordstown Motors Corp. $115 $121 18.69%
WKHS Workhorse Group Inc. $167 $99 26.00%
NKLA Nikola $544 $233 23.94%

Many large funds are restricted from buying stocks that are at risk of being taken off Nasdaq due to non-compliance

If a stock trades below $1 for more than a year then Nasdaq can take them off the exchange. Once you trade under $1 for 30-days Nasdaq will send you a notice like they did with ARVL. To regain compliance, you need to trade above $1 for (10) trading days in a row. While your company is under this notice, many funds will not allow fund managers to purchase these equities. This takes out a HUGE pool of investors from ARVL. This leaves only the little guys (you and I) to keep the stock up or down. Even if it was the sweetest deal in the world, many managers simply can't buy it for their clients while ARVL is under notice.

How does ARVL get taken off notice. They did it by doing a Reverse-Split on 4/14. Here they did a 50:1 Reverse Split, meaning they deleted 49 out of 50 of your shares and, in effect, boosted the stock price by 50x. This turned a 10-cent stock into a $5 stock, but it effectively did not change your ownership. It's like having (50) dimes and then being given a $5 bill instead.

As of today 4/21, we are 5 trading days after the Reverse Split. On day 10, ARVL will receive a notice they are no longer subject to being kicked off Nasdaq. This will open up a world of investors who can now press the buy button on ARVL.

ARVL has been radio silent since December; that will change soon

ARVL just announced this merger with Kensington (KCGI) a couple of weeks ago. I suspect they’ve been working on this deal for months. It is customary to be dead silent during negotiation periods. Now that the merger deal is closed, ARVL can resume sharing information with the investing public about why ARVL will be successful.

It’s been two weeks since the KCGI deal; why hasn’t ARVL issued any PR?
That is because they are waiting for the most opportune time to issue this PR. If they were issued last week or today, all the potential fund buyers who are restricted (as just explained) could not buy the stock. ARVL is waiting for the 10-day period to expire after the Reverse Split and compliance are officially regained. We believe they will then drop loads of PR that will turn a 6-month build-up of attention back onto the stock. Fund managers are going to see the disparity in price outlined in the Table above, and we believe the buys will return in a big way. Not to mention LOADS and LOADS of shorts that would love to unwind their positions for a massive gain here at the bottom.

The Merger with KCGI (Kensington)

There are so many good things about this merger. In about 3-4 months, ARVL will merge with KCGI. KCGI is an acquisition company. They bring expertise and cash. Upon merger, they will add $283m of cash to the ARVL balance sheet. Beyond that, they are adding an incredible amount of credibility and expertise. This is Kensington’s 5th Fund. Let’s take a look at some of their others. I will refer to them as K-1 through K-5.

  • K-1 – Merged with QuantumScape (EV Battery Technology)
  • K-2 – Merged with Wallbox (EV Charging)
  • K-4 – Merged with Amprius (EV Battery Technology)
  • K-5 – Expecting to merge with ARVL

K1, K2, and K4 have all been very successful. Especially in a world where the 2021 SPAC craze resulted in many companies becoming penny stocks, that has not happened to any of these. Kensington has become the gold standard for these transactions.

Let’s look at K-4 in a little more detail. This fund was formed in early 2022. Kensington, having already a Battery and a Charging company, really wanted an Automotive Manufacturer. So they tapped the heaviest of hitters to become the leader of K-4 in pursuit of finding an Automotive Target. Enter Dieter Zetsche former head of Daimler-Mercedes. Dieter is an automotive manufacturing icon.

K-4 in 2022 was unsuccessful in finding an Automotive Target, and they went with Amprius, which still proves to be an incredible acquisition. In the meantime, Kensington also put Dieter on the board of K-3 (Wallbox). Now it’s 2023, and Kensington still wants an automotive target, so they created K-5. Dieter almost certainly was a giant part of the due diligence for Kensington to select ARVL. Kensington and Dieter could have selected MULN, WKHS, or GOEV, but they chose ARVL. We suspect after the merger is through, Dieter could become the Chairman, or at least just an advisor for ARVL. You want to see a catalyst… This would be a mentos-in-a-cola-bottle-like-explosion of a catalyst; when we say Dieter is an automotive icon, we mean it!

Some other positive points

Are you afraid of a recession? The Arrival business plan is to sell large UPS style trucks/vans, a recession proof endeavor:

  • UPS has a standing non-binding order for 10k units that they can double to 20k units.
  • Despite a recession, UPS has trucks that age out of their fleet and need to be replaced
  • These are not retail customers who will be most impacted by recession. Lucid, Rivian, and Fisker will feel a big crunch in retails sales, not so for ARVL.
  • Each sale gets boosted by $40k of incentives from the Inflation Reduction Act. This will boost sales -and- help ARVL increase prices to maintain good margins.
  • Getting this class of truck certified is a 10x easier process because it is not a passenger vehicle like all the other EV startups!

What kind of future dilution can be expected?

Two forms of Dilution are coming up:

  1. $300m Westwood Financing Facility
    At any time, ARVL can get cash from Westwood in exchange for shares. However, they cannot do this while the stock price is under $5. The current price is $2.40. Therefore, no dilution from Westwood for at least 100% gains from now.
  2. KCGI Merger
    This will be highly dilutive. They’re essentially buying the company. So in 3-4 months, there will be a lot of dilution, and the degree to which will be determined based on ARVL's share price at the time of the merger. One important point to note is that this dilution brings with it nearly $300m of cash and transforms ARVL from a hopeless company to a company with hope. Lastly, all of these new KCGI shares are locked up after the merger for either 150 days or 365 days, depending on price action after the merger. Min. is 150 days, but if the stock price goes down 30%, the lockup is extended to 1 year. That means after the merger, the only tradable shares will be the current ARVL shares.

When can we expect any profits at Arrival?

Arrival, in the merger announcement, said they will have the Charlotte factory running by the end of 2024. Let’s examine what the profits from this center could look like because that will determine company valuation. We will do a normal and a bearish calculation. For starters, ARVL says the sale price will be $100k+ for the vehicle. Let’s go with $110k. Let’s assume a 15% profit margin. ARVL has also said their factories will make 10,000 vehicles per year. I’ll run the scenarios with 10,000 and a bearish 5,000.

Scenario 1 (Bullish):
10,000v x $110k = $1.1b Rev * 15% Profit = $165m Profit/Yr

Scenario 2 (Bearish):
5,000v x $110k = $550m Rev * 15% Profit = $83m Profit/Yr

What does this mean for the potential future market cap?

A common P/E ratio for an established automaker would be something like 6-10x. For Tesla, due to growth, it’s 40x. ARVL will be more of a growth story, but you can never assume it will be Tesla. Let’s peg ARVL at a conservative 15x.

Market cap for Scenario 1 (Bullish):
$165m Profit x 15x = $2.5b (5500% higher than today’s market cap)

Market cap for Scenario 2 (Bearish):
$83m Profit x 15x = $1.2b (2600% higher than today’s market cap)

Don’t forget, during this potential year after the KCGI merger, the only shares people will get their hands on due to the lock-up are the existing ARVL shares.

Kinetik Insider Sells & Antara Sales

Kinetik is the largest holder, and they’re selling between 10k-20k shares per day per filings. This is like $30-50k, so about a new Toyota car each day. Not very significant.

Antara has given ARVL cash at $10/share and converted Debt to Equity at $27.50/share. That, obviously, is a bad deal for them, given the current stock price. We'd imagine they are doing a lot of selling right now to manage risk. We suspect though that their current sales will be newcomers' gains very shortly.


This has been a high-risk trade that has hurt a lot of investors over the past couple of years. It is our opinion that the current stock price has taken out the risk substantially for newcomers. We think that the potential for this stock to be an awesome investment that will show pretty much astounding gains in the future is higher than any stock we can currently find in the market. Yet, this stock has disappointed many, and that is reflected in the share price. However, the catalysts coming forward, the KCGI merger, Dieter, Recession Proof sales, $40k per vehicle in government incentives, and insane under-valuation compared to peers all make this Arrival story extremely juicy for us.

Additional Ressources:

Disclaimer: The information provided on is for general informational purposes only and should not be considered as professional financial advice. The content presented on this website is not intended to be a recommendation to buy or sell any stock or investment product. The author of this article may hold positions in some of the stocks mentioned. Readers are advised to do their own research and consult with a licensed financial advisor before making any investment decisions. and the legal entity behind it (Task Venture Capital GmbH) does not guarantee the accuracy or completeness of the information presented and is not responsible for any losses or damages that may arise from relying on this information.
1.) 22. April 2023, 09:30 EDT:
v1.1: fixed typo in NKLA market cap. $233m -> $233



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