Rivian stock volatile as EV maker boosts production forecast, trims loss projection
Rivian also beat on both the top and bottom lines in its Q3 report.
Rivian stock (RIVN) reversed lower in midday trading after the electric truck maker reported third quarter results that beat expectations, in addition to upping its production forecast for the year and narrowing its full-year loss projection.
From a production standpoint, Rivian boosted its full-year forecast to 54,000 from 52,000 units. Its prior forecast of 52,000 units was lifted earlier in the year from 50,000.
"Due to the progress experienced on our production lines, the ramp of our in-house motor line, and the supply chain outlook, we are increasing our 2023 production guidance to 54,000 total units," the company said in its Q3 shareholder letter.
Rivian also narrowed its full-year adjusted EBITDA loss to $4.0 billion from $4.2 billion and revealed that its 2023 capex (capital expenditure) guidance was reduced to $1.1 billion.
Finally, Rivian said it is no longer subject to exclusively selling its electric delivery van (EDV) to Amazon, which is a shareholder in Rivian. Rivian still plans to build 100,000 delivery vans for Amazon, per an earlier agreement.
Amazon waiving off the exclusivity clause creates “a key upside potential to unlock EDV/Vans from being only 20-35k deliveries/yr towards its 60k+ capacity,” Evercore ISI analyst Chris McNally said in a note to investors. Rivian said its EDVs have higher margins than its consumer-focused R1 vehicles.
For the quarter, Rivian reported revenue of $1.34 billion vs. $1.31 billion estimated, with an adjusted loss per share of $1.19 vs. $1.32 expected. That revenue figure represents a 19.6% jump from Q2’s $1.12 billion and 150% more than the $536 million reported a year ago. On an adjusted EBITDA basis, Rivian reported a loss of $942 million vs. $1.04 billion expected, which is also narrower than the $1.3 billion loss reported a year ago.
"We're going to focus on driving up production volume and achieving better fixed cost leverage, achieving meaningful reductions in our material costs from a bill of materials point of view, working on building out our commercial and go-to-market operations to allow us to, not only continue driving demand, but to continue driving up our ASPs [average selling price]," Rivian CEO RJ Scaringe said during the Q3 conference call.
Last month, Rivian reported deliveries of 15,564 EV trucks, more than the 14,973 estimated per Bloomberg. Production also topped estimates at 16,304 vehicles.
Shares of EV makers and legacy automakers like GM (GM) and Ford (F) have also been hit hard, with the companies reporting waning or “evolving” EV demand. Last month Ford paused $12 billion worth of investments in its EV projects until “capacity” is needed. Ford said in its earnings report that US EV buyers were “unwilling to pay premiums for [EVs] over gas or hybrid vehicles, sharply compressing EV prices and profitability.” Fellow Big Three automaker GM pushed back its EV truck expansion in late October, noting “evolving EV demand” as the main reason for slowing its EV truck volumes.
Even Tesla (TSLA) isn’t immune to the EV demand story, with the automaker delaying construction of its upcoming Gigafactory in Mexico due to concerns about global economic conditions stemming from rising interest rates.
That being said, Rivian and its lifestyle-oriented trucks might be an outlier in the EV landscape.
Rivian’s aforementioned Q3 deliveries were up 23% sequentially compared to Q2, even as the company raised prices after selling out its initial cheaper orders. Unlike Ford and GM, Rivian is targeting coastal and higher-income buyers who are more immune to rising prices and higher interest rates compared to the broader population.
Rivian's path to profitability is by no means assured, however. Rivian’s valuation balances the company’s “recently strong execution against a challenging 2+ year execution plan,” Piper Sandler analyst Alexander Potter wrote in a note, adding that there is “a non-zero risk of delays and cost overruns.”
Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.
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