At a pivotal juncture in the electric vehicle industry, Reuters reported that E.V. manufacturer Arrival (US:ARVL) plans to reorganize its business and cut up to 30% of its staff. ARVL shares ended off 2.7% after the news broke on July 11.

The next day shares fell 1.4% in the regular session before rallying about two percent in after-hours trading. The company said the reorganization would allow it to start producing its Arrival Van on time in the third quarter.

Earlier this week, Bloomberg reported that competitor Rivian Automotive (US:RIVN) – which focuses on premium-level electric pickup trucks and SUVs – plans to cut hundreds of jobs following a staffing spike.

Rivian's second quarter deliveries topped 4,400 vehicles, putting it on track to hit its 25,000-unit 2022 production goal.

Arrival acknowledged its plans reflect the tough U.S. economy and inflation's corrosive effect on purchasing power. Despite the headwinds, ARVL's options data suggest bullish investors are undeterred.

ARVL Stock and Surprisingly Strong Sentiment

Although the contrarian investing philosophy garnered substantial interest in the post-COVID new typical, E.V. investors will have none of it and remain negative. 

Segment leader Tesla (US:TSLA) fell 41% this year through Wednesday. Several competitors, inluding ARVL stock, fared far worse.

Still, optimism is the order of the day in the derivatives market. Per Fintel data, ARVL's put/call ratio is 0.34. A score of 1 represents an equal number of puts and calls. A put/call ratio above one implies bearish sentiment, whereas any number below one is bullish.

However, in practice, the underlying U.S. equities market features an upward bias. So does the options market. That means that options traders have a built in bias that prices will rise, and they buy more calls than puts.Therefore, the absolute bull/bear threshold for the put/call ratio is closer to 0.7 than one.

Ultimately, a 0.34 ratio indicates strong – arguably unusually strong – sentiment for ARVL stock. Further, the sentiment has pivoted toward contrarian bullishness despite the underlying shares collapse.

Arrival's short interest as a percentage of the float is just under 13%. Usually, ten percent or higher short interest indicates high bearishness, on paper signifying greater-than-normal risks. However, the speculative fervor of attempting to spark short squeezes – or deliberately bidding up heavily shorted shares to force capitulation – may make ARVL stock an interesting candidate for speculation.

Investors should note that while the short-interest ratio (or days to cover) is elevated, at 3.78 days, it's below the 10-day threshold that many analysts consider too risky.

A Still Challenging Environment

Despite esoteric options market data, ARVL shares are a risky investment and have already lost 81.5% this year through Wednesday.

According to auto industry data provider Kelley Blue Book, sector players may encounter difficulties selling to retail consumers and enterprise-level clients, with the average transaction price for a new E.V. at $62,876 in January 2022. 

Yet recent data show hunger for the next great thing driving demand and deliveries, and electric vehicles now account for more than five percent of U.S. sales. Perhaps that's because E.V.s have always been costlier than their in-class combustion-powered counterparts.

Investors should conduct their due diligence – including a broader analysis of Arrival's core fundamentals – before considering a position in ARVL stock.