Rivian Automotive (RIVN) is looking to challenge Tesla (TSLA), Ford (F) and General Motors (GM) with its adventure-styled electric vehicles. Now, at least one analyst sees the EV startup beating third-quarter delivery estimates.
Rivian is expected to announce third-quarter vehicle deliveries in the coming days. In 2022, RIVN reported third-quarter production and deliveries on October 3. Analyst consensus has Rivian Q3 2023 deliveries totaling 14,000, according to FactSet. Last year, Rivian delivered 6,584 units in Q3.
On September 26, Baird analyst Ben Kallo designated Rivian stock as a “bullish fresh pick” ahead of third-quarter deliveries, on expectations RIVN will beat the consensus view.
“We see Q3 deliveries as a near-term catalyst and expect sentiment to improve as Rivan continues to realize cost benefits from an improving supply chain and the use of in-house components.” Kallo wrote.
The Irvine, Calif.-based automaker has been on a roller-coaster ride since its initial public offering two years ago, due both to overall market conditions and execution hiccups. Meanwhile, supply-chain issues have hampered the entire industry. Rivian has also had problems of its own complicate its launch.
Bumps in the road have included product recalls and price increases that had to be rolled back.
Rivian is not likely to be profitable for a while as it continues to ramp up production. But it did report better-than-expected second-quarter earnings and sales on Aug. 8. The company turned in an adjusted loss of $1.08 per share while revenue roughly tripled to $1.12 billion.
Wedbush analyst Dan Ives, a longtime Tesla bull, wrote on Aug. 8 that Rivian took “another big step in the right direction” with its second-quarter results.
“Demand looks strong for Rivian and visibility (is) improving into 2024,” Ives said. The analyst added he sees Rivian as “one of the core EV players over the next decade.”
Rivian Stock: The Road To Profitability
On September 12, UBS initiated coverage of Rivian stock with a neutral rating and 26 price target.
Rivian should reach positive gross margin in 2024 but larger volumes are not expected until later this decade and an additional capital raise will be needed to support future growth, according to UBS.
The company topped estimates for its second-quarter delivery report in early July. The EV startup delivered 12,640 vehicles in Q2, compared to Wall Street estimates of 11,000 deliveries. In its Q2 report, Rivian raised its full-year production guidance to 52,000 vehicles, nearly double last year’s production.
Rivian makes its vehicles in Normal, Ill. The plant has a production capacity of 150,000 units annually.
The EV startup currently produces an electric pickup-truck, SUV and commercial vans. In the first half of 2023, Rivian produced 23,387 vehicles. In all of 2022, it churned out 24,337 vehicles and delivered 20,332 units. That number fell short of Rivian’s stated production goal of 25,000 units for the year.
Last year, CEO RJ Scaringe said the global semiconductor chip shortage had been the “most painful” constraint to ramping up production. Management also cited “very sizable increases” in the cost of key metals, including lithium, nickel, aluminum and cobalt.
“Increasing our production is the primary lever in our path to profitability,” Rivian said in its Q2 2023 release.
The company added in its Q2 release that it expects to post its first gross profit in 2024. For fiscal 2023, Rivian expects adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) to be a loss of $4.2 billion.
Rivian lowered its capital expenditures forecast to $1.7 billion for 2023 after pushing some planned expenses into next year. Rivian previously guided to $2 billion in capital expenditures for the year.
On June 20, Rivian announced it signed a deal to use Tesla’s supercharging stations beginning in 2024. Ford and General Motors and a slew of other automakers had previously signed similar deals with Tesla.
DA Davidson in August wrote the firm is still “not 100% sold” with new EV SUV and pickup trucks entering the market monthly.
Rivian Stock IPO
Rivian rolled out the first all-electric pickup truck, the R1T, on Sept. 14, 2021, and its R1S SUV in the fall of 2022. The company launched with great fanfare on Wall Street.
On Nov. 9, 2021, the much-anticipated RIVN IPO priced strong, an upsized 153 million shares at $78 a share — above the expected range. Rivian stock has since fallen well below its IPO price.
Nevertheless, the EV startup had a monster IPO. It raised $11.9 billion, giving Rivian an initial valuation of roughly $77 billion. Rivian stock soared to 179.47 on Nov. 16, 2021, then sold off sharply over the following weeks and months.
Rivian had picked a good time to go public. It was among the few startup EV makers actually producing and delivering vehicles. EV peer Lucid Motors (LCID) more than doubled in the first four months after going public in July 2021, as it began deliveries.
As of Nov. 7, 2022, Rivian had 114,000 reservations on its R1 platform, up from the 98,000 at the end of June.
Amazon Has 18% Stake In Rivian
Rivian is currently prioritizing production of electric vans for Amazon (AMZN). Amazon already has around 1,000 Rivian commercial vans delivering packages in major cities in the U.S. It has ordered 100,000 of Rivian’s electric vans.
Amazon said on Feb. 2, 2022, that it had a roughly 18% stake in Rivian. However, Amazon is also looking elsewhere to electrify its fleet. On Jan. 5, 2022, Amazon and Stellantis (STLA) said they’re partnering to develop vehicles with Amazon software in the dashboards. Stellantis will also make electric delivery vans for Amazon.
Rivian Stock: The EV Price War
With Tesla and other automakers slashing EV prices in 2023, Rivian’s profit outlook could take a hit if it feels pressure to keep pace with its bigger competitors.
Rivian has already been in cost-cutting mode to improve its competitive stance vis-a-vis other EV makers. On Dec. 12, it said it had paused plans to build electric commercial vans in Europe with Mercedes-Benz. Rivian stock fell 5% on the news.
CEO Scaringe said the company is evaluating “growth opportunities” and pursuing “the best risk-adjusted returns on our capital investments.”
“At this point in time, we believe focusing on our consumer business, as well as our existing commercial business, represent the most attractive near-term opportunities to maximize value for Rivian,” he said in a Dec. 12 statement.
Meanwhile, Rivian hiked the price of its R1T electric pickup around 17% in March. That increased the base cost to about $78,975 from $67,500. The price of the R1S SUV jumped about 20%, bringing the new base price to about $84,000 from $70,000. All prices are before federal tax credits.
New Rivian vehicles are currently not eligible for full $7,500 EV tax credits under the Inflation Reduction Act (IRA). The company’s pickup truck and the SUV both meet the standards for $3,750 tax credit, according to the Internal Revenue Service (IRS) website.
RIVN fell 9.9% on Aug. 9 after second-quarter earnings. Rivian stock remains up about 28% higher so far this year. RIVN shares dropped 17% in August, following a three-month rally. The stock has angled down another 2.4% in September. Shares are trading about 71% below their IPO price of $78.
Rivian stock tumbled 9% on Oct. 10, 2022, after the startup recalled nearly all of its 13,000 vehicles on the road to fix a steering defect. Loosened fasteners could cause drivers to lose control of steering.
Rivian stock ranks ninth in IBD’s automaker industry group. RIVN has an 76 Composite Rating out of 99. Additionally, the stock has an 93 Relative Strength Rating and its EPS Rating is 42 out of 99.
The market status is showing “market in correction.” Rivian deliveries are picking up, but heavy losses are likely to continue for some time.
Despite the Q2 earnings beat and Q3 deliveries upcoming, Rivian stock is not yet a buy.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
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