Arrival (ARVL) receives non-compliance letter from Nasdaq because its stock share price is too low

EV startup Arrival announced that it has received a non-compliance letter from the Nasdaq Stock Market LLC, informing the company that the closing bid price has been below the minimum $1.00 per share for at least consecutive 30 days. Arrival now has until May to meet the minimum bid requirement to avoid being delisted on the stock market.

Arrival ($ARVL) is an EV start-up focused on delivering urban-centric mobility, which originally consisted of grand vehicle plans that included an all-electric passenger bus, a delivery van, and a rideshare-specific Arrival Car designed alongside Uber.

Shortly after going public via SPAC merger on the Nasdaq Stock Market in March of 2021, Arrival’s share price has trended downward to the point we see it at today – well below $1.00 per share. These financial woes were a factor in the startup’s announcement in July that it would be reorganizing its business to focus on solely on Arrival Van production.

That revised strategy included a complete halt to Arrival Bus and Car development to focus on the Van, which completed its first successful build using Arrival’s microfactory model in September. Even with a production proof of concept, Arrival has had to pivot once again to get its Van over the finish line.

A few weeks ago, Arrival announced plans to focus on US production of the Van at its microfactory in North Carolina, hoping to take advantage of federal EV tax credits under new terms in the Inflation Reduction Act. However, the shift overseas will subsequently involve “a sizable impact on the company’s global workforce, predominantly in the UK.” As the company is publicly exploring funding opportunities to keep going, its recent stock has represented its struggles.

As a result, the Nasdaq has issued a warning of delisting Arrival, but the startup has time to get its shares back up.

Arrival has until May 2023 to get stock up, possibly longer

Arrival confirmed the receipt of the non-compliance letter from the Nasdaq Stock Market in a press release today, outlining the reasoning behind the notice and its options going forward. There is no immediate effect in the listing of Arrival’s shares.

Because Arrival’s closing bid price of ordinary shares has sat below $1.00 for at least 30 consecutive days, the Nasdaq was required to alert the startup of the failure to comply. However, pursuant to Nasdaq Listing Rule 5810(c)(3)(A), Arrival has been given a grace period of 180 days, or until May 1, 2023, to meet the minimum bid price requirement.

Arrival’s stock price fell below $1.00 per share on September 19 and has not been able to bounce back yet. If the startup’s closing bid price per share reaches a buck or higher for ten consecutive days, Nasdaq will close the compliance matter. If it cannot meet these requirements, Arrival could be delisted from the Nasdaq Stock Market entirely.

Should Arrival not eclipse $1.00 per share by May 1, there is a chance it could qualify for an additional 180-day grace period, but only if it applies to transfer the listing of the company shares to the Nasdaq Capital Market. Per the release:

To qualify, the Company (Arrival) would be required to meet the continued listing requirement for the market value of its publicly held Shares and all other initial listing standards for the Nasdaq Capital Market, with the exception of the minimum bid price requirement, and provide written notice of its intention to cure the minimum bid price deficiency during the second compliance period by effecting a reverse stock split, if necessary. If the Nasdaq staff determines that the Company will not be able to cure the deficiency, or if the Company is otherwise not eligible for such additional compliance period, Nasdaq will provide notice that the Shares will be subject to delisting. 

Arrival states that it intends to monitor its closing bid price during this initial grace period and “will consider its options” in order to regain Nasdaq minimum price requirements. We will check in on this one again in our EV stock report at the end of November.

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