Rivian (RIVN) Electrifies Investors By Reaffirming Annual Production Guidance As R1 Preorders Rise
1:52 pm Thursday, November 10th, 2022
Upstart electric vehicle maker Rivian Automotive (RIVN) is charging higher following a mixed 3Q22 earnings report that included a smaller-than-expected net loss of ($1.57)/share, but also a miss on the top-line. Driven by a 67% qtr/qtr increase in production to 7,363 vehicles, revenue soared by 64% sequentially to $536 mln, which was still well below expectations. That top-line shortfall, though, isn’t creating much of an issue for the stock today because the primary story for RIVN revolves around production and its prospects for improving gross profits as its Normal, Illinois factory becomes more efficient.
RIVN’s Q3 production number was already known because it was disclosed in an SEC filing in early October. Therefore, the main focal point centered on whether RIVN would reaffirm its FY22 production target of 25K vehicles. Despite contending with ongoing supply chain issues, the company did indeed reaffirm that guidance, providing the stock with a jolt this morning. To achieve that target, RIVN will need to produce about 10,700 vehicles in Q4, representing a qtr/qtr increase of about 45%.
Beyond the production developments, there were a few other positive items from the earnings report.
Although RIVN is burning through a substantial amount of cash — cash flow from operations in Q3 was ($1.4) bln — the company has nearly $14.0 bln in cash on the balance sheet. According to CEO RJ Scaringe, that is sufficient to get the company through 2025, limiting the risk that RIVN will need to execute a dilutive stock offering during the next couple of years.
One disappointment is that RIVN pushed back the launch of its R2 platform by one year to 2026. The R2 platform, which will support the production of a pickup truck and smaller SUVs, will be launched at RIVN’s future factory in Georgia. Scaringe said that the decision to delay the launch was made to ensure there’s enough time to prepare for production at the plant. Other than this development, there’s plenty for investors to feel encouraged about as both demand and production are trending higher.
