Stock in electric vehicle start-up
Rivian Automotive,
and shares of peers, are tanking due to fears that EV revolution is more of a technological skirmish than a sea change.
Investors will get to hear what Rivian management thinks about recent developments when the company reports third-quarter results on Tuesday evening.
For the key reported numbers, Wall Street is looking for a per-share loss of $1.31 from sales of $1.3 billion, according to Bloomberg. Rivian (ticker: RIVN) reported a $1.08 loss from sales of $1.1 billion in the second quarter of 2023.
A loss won’t surprise investors. But they will want to see improvement, especially with respect to cash flow. Rivain is expected to use about $1.1 billion in the quarter, down from $1.6 billion used in the second quarter of 2023. Wall Street projects cash use of about $1 billion to $1.4 billion for each of the next few quarters.
Slowing cash burn would be a sign that the company is lowering costs and getting some benefit of scale as it produces more vehicles.
Rivian produced 16,304 units in the third quarter, a record, up from 13,992 produced in the second quarter, and up from 7,363 produced in the third quarter of 2022.
In August, management said it expected the company to produce some 52,000 units in 2023. Results from the first nine months of the year mean only about 12,300 are needed in the fourth quarter to hit that guidance.
That’s likely a conservative number. Wall Street projects fourth-quarter deliveries of about 14,000 units. Deliveries and production should closely mirror one another.
While investors want improvement, it might not take a big earnings “beat” with guidance moving higher to help the stock. Shares have been badly beaten up.
Through midday trading Monday, Rivian shares were down about 32% over the past three months while the
S&P 500
and
Nasdaq Composite
were both off about 3%. Investors have been worried about slowing EV demand after weak earnings reported by
Tesla
(TSLA) on Oct. 18. That report was followed by
Ford Motor
(F) and
General Motors
(GM) slowing EV-related spending and weak fourth-quarter sales guidance from EV supplier
ON Semiconductor
(ON).
All that has investors on edge. Management hosts a conference call at 5 p.m. Eastern time to discuss results. Investors will want signs the outlook for EV sales in the U.S. simply isn’t as bad as feared.
Options markets imply the stock will move roughly 10%, up or down, after earnings are reported. shares have moved about 12%, up or down, on average following the past four quarterly reports. Shares have moved up twice and fallen twice over that span.
Rivian ended the second quarter with about $11.6 billion in cash and investments on its books. It also sold $1.5 billion in convertible debt early in October.
Rivian should have ended the third quarter with some $12 billion in cash on its books. Its entire market capitalization is about $16 billion, not much higher than the cash balance. Of course, there is some debt on Rivian’s books too.
Rivian’s enterprise value, its market cap plus debt less the cash, is about $9 billion, or about 2 times estimated 2024 sales. Tesla trades for about 6.7 times estimated 2024 sales. EV peer
Lucid
(LCID) trades for about 9 times estimated 2024 sales.
Write to Al Root at [email protected]
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