Rivian reports results after the bell. Here’s what investors should know
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An electric Rivian truck can be seen near Times Square’s Nasdaq MarketSite building on November 10, 2021.
Michael M. Santiago | Getty Images
Wall Street analysts have established a high standard for EV startups Rivian AutomotiveFollowing its IPO, the company was compared to Superman by CEO RJ Scaringe. “the one”You are capable of challenging Tesla.
After the market closes, the public will see whether Rivian or Scaringe can live up the hype. The automaker’s first quarter financial results will be reported on Thursday.
Rivian provided some production and earnings guidance, but not all. as part of its IPOInvestors should focus their attention on any new or modified plans. It will be focusing on vehicle production and consumer deliveries, as well as pre-orders for its first electric cars.
As the company tries to increase production at Normal, Ill of its first three EVs, it is less concerned about revenue and financial results. Amazon.
Wall Street analysts warn investors that Rivian will experience growing pains, but they believe the company can overcome these challenges to become a credible competitor. TeslaEV Industry.
Morgan Stanley’s Adam Jonas stated in an investor note that Tesla investors have failed to convince them of legacy OEMs, a raft de-SPAC EV startup swarms over the last 12 months. He also suggested Rivian as overweight and a target price of $147. Rivian, while there are risks, has the attributes that we consider to be “the one” for you EV portfolio.
Morgan Stanley’s price target matches the $134.08 target price based upon 15 analysts who were compiled by FactSet.
This article explains the plans of the Rivian and provides information for investors ahead of Thursday’s release of its third quarter results.
Expect losses
Rivian has a history of growing. Rivian like other speculative EV-startups is a gamble on its future. Rivian began production of the only day it was founded. R1T pickup in September,he has only delivered a few trucks, and most of them to his employees.
According to BofA Securities, John Murphy (an analyst at BofA Securities), Rivian will not turn a profit before 2025.
Rivian’s Manufacturing Campus in Normal, IL. RJ Scaringe with his team
Rivian
Rivian estimated that operating losses would range between $745m and $795m, and a loss of $1.21billion to $1.28billion for the third quarter. The company forecasted that its quarterly revenues would be approximately $1 million.
Murphy wrote last week in an investor note, that the company’s near-term success would be measured more by production trends and orders than financials.
Pre-orders
Wall Street is focusing on Rivian’s reservations numbers as a gauge of demand.
Rivian revealed to investors last month it had a backlog for pre-orders of 55,400 R1T or R1S vehicles from North American customers and expects to ship these before the end 2023.
Rivian may see an increase in pre-orders from consumers, but any pull or push ahead with its plans to deliver vans commercially to Amazon might be good for stock.
Amazon is the largest online retailer. largest stakeholder in Rivian at 20%Pre-ordered 100,000 electric vehicles from the start up, which are due to arrive in 2025.
Jonas from Morgan Stanley said that he thinks Amazon’s order volume could become “stale” over time and may “be substantially higher.”
Production
Rivian’s plans to launch three cars simultaneously and increase production would seem daunting to an automaker or start-up. Superman steps in to save the day.
To be a long-term competitor, Rivian must ramp up quickly and efficiently. Clark Kent (R.J. Scaringe), needs to be seen in the phone booth quickly as Superman to rescue Rivian, Baird Equity Research’s analyst George Gianarikas stated to investors.
Rivian stated that it plans to ship approximately 1,000 R1Ts, fifteen R1S SUVs, and 10 delivery vans for Amazon by 2021.
Rivian’s all-electric pickup truck the R1T sits in one its Brooklyn facilities, November 9, 2021.
Spencer Platt | Getty Images
Analysts stated that investors should not expect an ideal production ramp-up, but rather a slow and steady process with some bumps.
RBC Capital Markets’ Joseph Spak said that “while there will undoubtedly be some hiccups along the way,” he predicted Rivian will hit its production targets, growing at a compound annual rate of 52% by 2030.
In an investor note, he stated that the trial by fire method can forge Rivian’s genetic DNA and set it up for success in the future.
Products
An investor could feel a short-term negative about a delayed product launch, however it may be long-lasting. Automakers should address quality and production issues as soon as possible before they scale manufacturing.
Rivian stated previously that the company expected to start producing the R1S SUV, as well the Amazon vans, by the end 2012 at its Illinois facility.
Apart from the typical issues of increasing production, other problems are facing the automobile industry. significant supply chain issuesRivian could be set back by this in the immediate future.
In an investor note, Goldman Sachs’ Mark Delaney stated that Viian was still at the beginning stages of its ramp and although the company boasts industry veterans as a team, it faces challenges in the supply chain.
Ford
Although Rivian is positive about Amazon’s relationship, it can be seen as negative for Rivian and its relationship with Ford MotorThe situation is more complicated for, with a roughly 11% stake. This is something that investors have been closely watching.
It started as an informal partnership between established automaker Rivian and the start-up. However, the relationship has turned to be strictly commercial. Rivian and Ford have ended joint development plans and Ford gave up Rivian’s seat.
While congratulating Scaringe on his achievement, Jim Farley of Ford has called Rivian an opponent.
Ford’s ownership of Rivian is not clear.
— CNBC’s Michael BloomThis report was contributed by you.
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