By Rivian Automotive, a prominent player in the electric vehicle (EV) industry, has recently experienced a decline in its stock price. This decline stems from concerns that the EV revolution may not be as transformative as previously believed, instead resembling more of a technological skirmish rather than a complete sea change.
Rivian’s Third-Quarter Results: What to Expect
Investors eagerly await Rivian’s third-quarter results, scheduled for release on Tuesday evening. These results will shed light on the company’s perspective regarding recent developments in the industry.
According to Bloomberg, Wall Street analysts predict a per-share loss of $1.31 on sales of $1.3 billion for the quarter. Comparatively, in the second quarter of 2023, Rivian reported a loss of $1.08 per share from sales of $1.1 billion.
While investors anticipate a loss, they will closely examine the company’s cash flow performance and hope for signs of improvement. In the second quarter of 2023, Rivian utilized $1.6 billion in cash, whereas expectations indicate a decrease to approximately $1.1 billion for the third quarter. Furthermore, analysts project cash usage ranging from $1 billion to $1.4 billion for the upcoming quarters.
The ability to slow down cash burn would signify that Rivian is effectively reducing costs while capitalizing on economies of scale as its vehicle production ramps up.
Impressive Vehicle Production Numbers
Rivian achieved a record-breaking milestone in the third quarter, with the production of 16,304 units—a significant increase from the 13,992 units manufactured in the second quarter and more than double the 7,363 units produced in the third quarter of 2022.
This heightened production output aligns with management’s previous announcement in August, where they had projected the manufacturing of approximately 52,000 units in 2023. Considering the results attained during the nine months of this year, the company only needs to produce around 12,300 units to meet its guidance for the fourth quarter.
However, industry analysts believe that this figure may be conservative, with fourth-quarter deliveries anticipated to reach approximately 14,000 units. As such, deliveries and production levels should closely align.
The Road Ahead
Despite the desire for positive developments and an earnings “beat,” Rivian’s stock may not be easily lifted in the current market climate. The shares have experienced a significant decline, highlighting the challenges faced by the company.
By addressing cost concerns and achieving higher production levels, Rivian has the potential to regain investor confidence and navigate the evolving landscape of the electric vehicle industry. Only time will tell whether Rivian can successfully navigate these challenges and emerge stronger in the future.
Rivian Faces Investor Concerns Amidst Slowing EV Demand
Rivian, a prominent electric vehicle (EV) company, has experienced a decline of approximately 32% in its shares over the past three months. This downward trend is in contrast to the comparatively modest 3% decline observed in the S&P 500 and Nasdaq Composite. The market has been reacting to concerns regarding a potential decrease in EV demand, prompted by Tesla’s (TSLA) lackluster earnings report on October 18. Furthermore, Ford Motor (F), General Motors (GM), and EV supplier ON Semiconductor (ON) have all reported reduced spending in EV-related endeavors and weak sales guidance for the fourth quarter.
The combination of these factors has left investors with a sense of unease. To address these concerns, Rivian’s management will be hosting a conference call at 5 p.m. Eastern time to discuss the upcoming results. Investors are eagerly looking for signs that the outlook for EV sales in the U.S. is not as dire as initially feared.
The options markets indicate that there may be a potential 10% movement in Rivian’s stock price, either upward or downward, following the earnings report. Historically, Rivian’s shares have witnessed an average movement of approximately 12% after the past four quarterly reports, with two increases and two decreases over that period.
As of the end of the second quarter, Rivian had approximately $11.6 billion in cash and investments. Additionally, in early October, the company sold $1.5 billion in convertible debt. Thus, it is expected that Rivian should have closed the third quarter with roughly $12 billion in cash reserves. It is worth noting that the company’s market capitalization stands at around $16 billion, which is only slightly higher than its cash balance. However, Rivian does carry some debt on its books.
When considering Rivian’s enterprise value (market cap plus debt minus cash), it amounts to approximately $9 billion. This figure represents around 2 times the estimated sales for 2024. In comparison, Tesla is trading at approximately 6.7 times its estimated 2024 sales, while EV peer Lucid (LCID) is trading at about 9 times its projected 2024 sales.
In conclusion, Rivian is facing investor concerns due to the perceived slowdown in EV demand. The company’s upcoming conference call will seek to alleviate these worries by shedding light on the true state of EV sales in the U.S. Additionally, Rivian’s financial standing, with a significant cash balance and manageable debt, provides some stability amidst the current market volatility.
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