Tech

Rivian reports the results after the bell. Here’s what investors should know

An electric Rivian truck is displayed near the Nasdaq MarketSite building in Times Square on November 10, 2021 in New York City.

Michael M. Santiago | beautiful pictures

Wall Street analysts have set high threshold for electric vehicle launch Rivian Automotive after its blockbuster IPO last month, compared CEO RJ Scaringe to Superman and said the company “one” capable of challenging Tesla.

Whether Rivian and Scaringe, who like Clark Kent, can live up to the hype will begin Thursday after the market closes when the automaker reports its first-quarter financial results with as a public company.

While Rivian gave some earnings and production instructions as part of its IPO, investors will focus on any updates or changes to its plans. Specifically, vehicle production, delivery to consumers and pre-orders of the company’s first electric cars.

At this point, the company’s revenue and financial results are less relevant because it’s trying to ramp up production of three products at the same time at its factory in Normal, I. because Amazon.

All in all, Wall Street analysts are warning investors to expect some growing difficulties for Rivian, but they predict the company will successfully overcome such challenges and become a strong competitor. worthy competitor Tesla and others in the electric vehicle industry.

“Automotive investors miss Tesla have struggled to make the case for legacy OEMs and a host of EV de-SPAC startups over the past 12 months,” Morgan Stanley’s Adam Jonas wrote in an investor note last week. Share price target is $147. “While the risk remains, we believe Rivian has all the important attributes to be a ‘factor’ that cannot be eliminated from your electric vehicle portfolio. .”

Morgan Stanley’s price target is in line with an overweight rating and a target price of $134.08 per share based on 15 analysts compiled by FactSet.

Here’s more about Rivian’s plans and what investors should know ahead of its third-quarter results on Thursday after the bell.

Expected loss

Rivian is a growth story. Like many speculative EV startups, Rivian bets on its future, not its current finances. It just started production R1T pickup in September, and has delivered a handful of trucks and most of it to employees.

The company expects capital expenditures of around $8 billion through 2023, with some analysts like John Murphy of BofA Securities forecasting Rivian won’t turn to operating profit until at least 2025.

RJ Scaringe and team on grand opening day at Rivian’s production campus in Normal, IL.

Source: Rivian

For the third quarter, last month, Rivian estimated an operating loss of $745 million to $795 million and a net loss of $1.21 billion to $1.28 billion. It forecasts its quarterly revenue of about $1 million.

Murphy, in an investor note last week, said the company’s “short-term business success will be measured by orders and production trends” rather than finances.

Pre-orders

Wall Street is particularly focused on Rivian reservations as a measure of demand.

Last month, Rivian revealed to investors that it has pre-orders for 55,400 R1T and R1S vehicles from customers in North America and plans to deliver these vehicles by the end of 2023.

In addition to consumer pre-orders, any increase or stretch ahead of Rivian’s plan to deliver commercial trucks to Amazon could positively impact the company’s stock.

Amazon, is largest stakeholder in Rivian with 20%, has pre-ordered 100,000 electric vans from a planned launch to 2025.

Jonas of Morgan Stanley said he believes Amazon’s order numbers could be “stale” and “significantly higher over time.”

Manufacture

Rivian’s plan to launch and ramp up production of three vehicles simultaneously would be daunting for an established automaker, let alone a startup. That’s where Superman comes in.

“Rivian needs quick and efficient acceleration to become a serious long-term contender. That is to say, Clark Kent (RJ Scaringe) needs to emerge from the phone booth when Superman is early in order to scale Rivian and save the day.” the plane,” Baird Equity Research analyst George Gianarikas told investors in a note.

Rivian said it expects to deliver about 1,000 R1Ts, 15 R1S SUVs and 10 delivery vans to Amazon in 2021.

Rivian’s new all-electric pickup, the R1T, is located at one of its facilities on November 9, 2021 in the Brooklyn borough of New York City.

Spencer Platt | beautiful pictures

Investors shouldn’t expect a perfect yield curve, analysts say, but a slow and steady one this time around with some volatility along the way.

RBC Capital Markets’ Joseph Spak said that “there are bound to be some hiccups along the way”, predicting Rivian will hit its production targets, growing at a compound annual rate of 52% in 2030.

“Testing with this fire approach can help train Rivian’s DNA to set it up for future success,” he said in an investor note.

Products

Ford

While Rivian’s relationship with Amazon is considered positive, its relationship with Ford Motor, which has about 12% stake in the company, is a bit more complicated. That’s what investors are watching.

What started as a friendly partnership between the automaker and the startup turned financially crippling when the parties ended a joint development plan for a vehicle and Ford gave up a seat. on Rivian’s board of directors.

Ford CEO Jim Farley, while congratulating Scaringe, called Rivian a competitor.

It is unclear how long Ford plans to retain its ownership stake in Rivian.

– by CNBC Michael Bloom contributed to this report.

https://www.cnbc.com/2021/12/16/rivian-reports-results-after-the-bell-heres-what-investors-should-know.html Rivian reports the results after the bell. Here’s what investors should know

Sarah Ridley

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