Rivian Stock Jumps As Deliveries Top Estimates – Investor's Business Daily

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Rivian Automotive (RIVN) reported deliveries of 12,640 in the second quarter, beating Wall Street estimates. Rivian stock surged in early trading Tuesday.
Analysts had expected deliveries of 11,000 for the quarter. The automaker also reiterated its 2023 target for 50,000 deliveries.
On July 2, EV leader Tesla reported Q2 deliveries of 466,140, also topping estimates.
In a June 20 news release, Rivian announced drivers will have access to more than 12,000 Tesla Superchargers in 2024. Rivian stock gained on the news.
Rivian will also incorporate North American Charging Standards charge ports in R1 vehicles starting in 2025, as well as in its upcoming R2 platform.
The company reported a loss of $1.25 per share vs. FactSet’s estimate of $1.62. Sales came in at $661 million. The EV startup won’t be profitable for a while as it continues to ramp up production. RIVN stock gained almost 6% after-hours following earnings news.
The company still expects to produce 50,o00 for 2023. That’s nearly double last year’s production but well below the 60,000 Wall Street had been expecting.
As of Nov. 7, 2022, Rivian had 114,000 reservations on its R1 platform, up from the 98,000 at the end of June.
“A myriad of production issues at its main factory in Illinois continue to haunt the Rivian story which has reservations that we estimate are in the 120k+ range (unfortunately did not give the actual number last night) with production levels of a softer 50k in 2023,” Wedbush analyst Dan Ives said in a note to clients Wednesday.
“While this is a massively complex operation in Normal, Ill., it is disappointing that 18 months later Rivian remains in this spider web of production issues with the worry that customers will start to churn to competitors (Ford, GM, Tesla, etc.) as reservations get pushed out,” he added.
Rivian has been on a roller-coaster ride since its IPO, due both to overall market conditions and execution hiccups.
Supply-chain issues have hampered the entire industry over the last couple of years. But Rivian has also had a rough start managing its launch. Bumps in the road have included product recalls and price increases that had to be rolled back.
Last month, EV giant Tesla (TSLA) and Ford (F) slashed prices for the EVs, triggering what Ives called a “price war” at the time. That could mean Rivian’s profitability could take a hit, if it feels pressure to follow suit.
Tesla cut its prices by up to 20%, while Ford reduced Mustang Mach-E electric SUV’s price by as much as $6,000.
Meanwhile, Rivian has already been in cost-cutting mode to improve its competitive standing among EV makers. On Dec. 12, it said that it’s pausing plans it started just a few months prior to build electric commercial vans in Europe with Mercedes-Benz. Rivian stock fell 5% on the news.
CEO RJ Scaringe said the company is evaluating “growth opportunities” and pursuing “the best risk-adjusted returns on our capital investments.”
“At this point in time, we believe focusing on our consumer business, as well as our existing commercial business, represent the most attractive near-term opportunities to maximize value for Rivian,” he said in a statement on Dec. 12.
The companies had intended to open a new factory in Central/Eastern Europe, where Mercedes-Benz has an existing site. The joint venture would have started production “in a few years.”
Rivian shares tumbled 9% on Oct. 1o, 2022, after the startup recalled nearly all of its 13,000 vehicles on the road to fix a steering defect. Loosened fasteners could cause drivers to lose control of steering.
Wedbush’s Ives said the recall was a “black eye” for Rivian, as it is still in a “prove me” stage among Wall Street investors.
Rivian delivered 7, 946 vehicles in the first quarter of 2023, basically in line with FactSet analysts’ expectations for about 8,000.
The EV maker said it also produced 9, 395 vehicles.
Q2’s production numbers is a turning of the tide of sorts for Rivian.
In 2022, Rivian produced 24,337 vehicles and delivered 20,332 vehicles. It fell short of its stated goal of 25,000 for 2022.
At the time, CEO Scaringe said the global semiconductor chip shortage had been the “most painful” constraint in ramping up production.
Management had also cited “very sizable increases” in the cost of key metals, including lithium, nickel, aluminum and cobalt.
High oil prices had also resulted in “significant increases in freight charges and raw material costs.”
As a result, Rivian cut labor costs, laying off about 5% of Rivian’s workforce of more than 14,000 employees. Management hinted it could also cut some internal programs to further curb costs.
Rivian canceled the base “Explore” R1T electric pickup truck model, which started at $67,500, according to a report by The Verge, citing company officials. Instead, Rivian will focus on making the $73,000 “Adventure” model. Customers with existing orders had until Sept. 1, 2022 to either upgrade or cancel their order.
Rivian also pulled the plug on its less expensive trim for its R1S electric SUV.
Rivian spokesperson Tanya Miller told The Verge that the company decided to no longer offer the Explore package so it can “deliver as many vehicles as possible.”
Earlier, Rivian scrapped a 5-seat R1S electric SUV. It will only be offered in a 7-seat version.
Additionally, Rivian hiked the price of its R1T electric pickup around 17% last March, which increased the base cost to about $78,975 from $67,500. The price of the R1S SUV jumped about 20%, bringing the new base price to about $84,000 from $70,000. All prices are before federal tax credits.
Biden’s climate bill that was signed into law includes new EV tax credits. But Rivian won’t qualify for most of them. The new $7,500 incentive includes new price limits. The price limits are $80,000 for zero-emission vans, SUVs, and trucks. Electric sedans up to $55,000 qualify.
Moreover, the incentive is also only available to individuals reporting adjusted gross incomes of $150,000 or less, $300,000 for joint filers.
Rivian rolled out the first all-electric pickup truck, the R1T, on Sept. 14, 2021, and its R1S SUV in the fall of 2022. The company launched with great fanfare on Wall Street. On Nov. 9, 2021, the much-anticipated RIVN IPO priced strong. The EV startup had a monster IPO, however Rivian stock has fallen well below its IPO price. Rivian now has a market cap of $14.4 billion. Is Rivian stock a good buy?
The Rivian IPO priced an upsized 153 million shares at $78 a share Nov. 9, 2021, above the expected range. The RIVN IPO raised $11.9 billion, giving Rivian an initial valuation of roughly $77 billion. Rivian stock soared to 179.47 on Nov. 16, 2021, but then sold off sharply over the following weeks and months.
Rivian picked a good time to go public, as it is among the few startup EV makers actually producing and delivering vehicles. Lucid Motors (LCID) more than doubled in the first four months after going public in July 2021, as it began deliveries. LCID stock came public via a SPAC merger. LCID stock has since dropped to around $7.
The Amazon (AMZN)-backed Rivian’s R1T beat Tesla and General Motors auto to the punch, as the EV market for electric trucks heats up.
Rivian makes its vehicles at its plant in Normal, Ill. The plant has a production capacity of 150,000 units annually.
The company is prioritizing production of electric vans for Amazon. Amazon currently has around 1,000 Rivian commercial vans delivering packages in major cities in the U.S.
Amazon has ordered 100,000 of Rivian’s electric vans. And while Rivian’s R1T pickup has grabbed headlines recently, Amazon’s vans are more likely to be revenue drivers in the near term.
Amazon said on Feb. 2, 2022, that it had a roughly 18% stake in Rivian. However, Amazon is also looking elsewhere to electrify its fleet, On Jan. 5, 2022, Amazon and Stellantis (STLA) said they’re are partnering to develop vehicles with Amazon software in the dashboards. Stellantis will also make electric delivery vans for Amazon.
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Rivian stock has an RS Rating of just 16 out of a best-possible 99. Institutional investors hold 54% of its stock. Its Accumulation/Distribution Rating is B-, indicating moderate buying of Rivian stock among institutional investors.
Rivian stock ranks No. 12 in IBD’s Auto Manufacturers group.
The Rivian R1T is the first electric pickup to market, but not the last.
GM has begun delivering its EV Hummer and has begun producing its Hummer SUV EV. General Motors will follow up with a Silverado EV as well as a GMC electric pickup for 2023. Ford’s first electric pickup, the F-150 Lightning has already been rolled out. It has a targeted range of 300 miles vs. the Rivian’s truck’s 314-mile range per charge.
Meanwhile, Tesla CEO Elon Musk said Cybertruck’s production won’t begin until “hopefully” sometime in 2023. That could reflect issues with mass producing 4680 batteries, key to making the Cybertruck as well as the recently launched Semi and the long-delayed Roadster viable.
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Deliveries are picking up, meaning Rivian is generating more revenue, with rapid growth from essentially zero seen. But heavy losses are likely to continue for some time.
Rivian stock gapped up 14% after topping Q2 delivery estimates on July 3.
Bottom line: Despite the Q1 earnings beat and a surge in deliveries, Rivian stock is not yet a buy.
Shares are trading well below their IPO price of $78. Rivian stock is trading near $19. Its RS Rating is just 16 out of a best-possible 99. But keep an eye on this intriguing EV startup as production gains steam.
Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.
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