Rivian Automotive Inc. is scheduled to announce its quarterly earnings on Tuesday after the bell. This update comes after the company’s controversial decision to offer $1.5 billion worth of convertible debt, which received backlash from investors. Additionally, Rivian will soon face competition from Tesla Inc., which plans to release its electric pickup truck, the Cybertruck, on November 30th.
Impact on Rivian’s Market Position
While the Cybertruck may not directly compete with Rivian’s offerings, it could impact the market demand and appeal for Rivian’s pickups and SUVs, which are specifically marketed for outdoor and rugged terrain use. The introduction of the Cybertruck may attract potential customers who desire an electric vehicle but find Rivian’s price range of approximately $73,000 out of reach. However, Rivian is actively developing a second-generation vehicle that is expected to be more affordable.
According to analysts surveyed by FactSet, Rivian is projected to narrow its quarterly loss to $1.34 per share compared to a loss of $1.51 per share in the third quarter of 2022. On the revenue front, sales are expected to exceed $1 billion for the second consecutive quarter, with analysts predicting $1.32 billion in revenue compared to $536 million a year ago.
Rivian’s stock performance has been disappointing, continuously underperforming the broader equity market. Over the course of this year, the stock has declined by more than 7% and has experienced a significant loss of over 47% in the past 12 months. In contrast, the S&P 500 index has seen gains of over 13% and approximately 16% in the respective timeframes.
Rivian’s Quarterly Report: Key Points to Focus On
As investors gear up for Rivian’s upcoming quarterly report, several key factors are expected to be in the spotlight. Analysts are particularly interested in the company’s cash burn rate, in light of the recent convertible notes offering that caught many investors off guard. CFRA analyst Garrett Nelson emphasizes the importance of understanding Rivian’s current financial situation.
Another crucial aspect to watch out for is the demand for Rivian’s R1T electric pickup truck and R1S electric SUV. Given the signs of a significant slowdown in electric vehicle (EV) demand, it will be interesting to see how this affects Rivian’s sales figures. Additionally, analysts are eager to learn more about the capital expenditure (capex) costs and specific details pertaining to Rivian’s new manufacturing plant near Atlanta.
Ivana Delevska, founder and chief investment officer of Spear Invest, also highlights the significance of Rivian’s cash burn rate and its path towards positive margins. According to Delevska, Rivian aims to achieve positive gross margins by 2024. Despite concerns about the current macroeconomic environment and high interest rates impacting the automotive industry, Delevska believes that Rivian, being a niche manufacturer with a strong order book, will be able to overcome these challenges.
Furthermore, Delevska suggests that Rivian is likely to benefit from lower raw material costs and favorable pricing on components, potentially enabling the company to mitigate any potential topline pressure. Highlighting Rivian’s strong sales and production figures in the previous quarter, Delevska addresses some of the questions regarding the company’s decision not to revise its guidance.
Considering the tough macroeconomic conditions, Rivian’s management is adopting a conservative approach. Although analysts do not anticipate a significant increase in revenue, they expect positive surprises on the cost side of operations.
In conclusion, as investors eagerly await Rivian’s quarterly report and analyst call, key areas of focus include the company’s cash burn rate, the demand for its electric vehicles, capex costs, and developments surrounding its new manufacturing plant. Despite challenges posed by the broader economic environment, Rivian’s strong order book and potential cost-saving measures may position the company favorably in the market.