Rivan Earnings Preview: RIVN stock caves after early Tuesday surge
- DigiTimes reports that Apple is in discussions with Rivian.
- RIVN shares have melted from an 8% gain to even ahead of Q1 results.
- Rivian will unveil results for quarter ending in March in Tuesday's post-market.
- Wall Street expects $-1.16 in adjusted EPS on revenue of $1.17 billion.
Rivian (RIVN) stock couldn’t hold onto bulls’ initial buying spree on Tuesday ahead of its quarterly earnings call after the close. Rivian stock opened more than 8% higher on Tuesday but quickly shed those price levels and is trading flat at the time of writing.
Gains reached more than 10% in the premarket as traders expect heavy volatility in the lead up to Q1 results. The Dow Jones Industrial Average, S&P 500 and NASDAQ Composite have all advanced between 0.1% and 0.3% at the time of writing.
Rivian earnings outlook
Not much is expected from Rivian on the earnings front. Simply put, the electric vehicle (EV) maker is still in the initial stage of its S-curve. Rivian continues to require heavy investment that causes losses at this stage of production, and consensus heading into the earnings call is $-1.16 in adjusted earnings per share (EPS). This compares to $-1.25 in the same quarter one year ago.
Rivian delivered 13,588 vehicles in the first quarter compared to the prior expectation of 11,893, so revenue should at least beat the Wall Street Q1 consensus of $1.17 billion. This compares to $661 million in sales a year earlier.
CEO RJ Scaringe expects 57,000 vehicles to be produced in 2024, and deliveries should arrive close to that figure.
The most fascinating aspect of the earnings call will assuredly be questions from analysts regarding a recent article in DigiTimes that exposed rumors that Apple (AAPL) is floating a possible partnership with Rivian. The iPhone maker dabbled in producing its own EV over the past half decade but then shelved the project at the start of this year.
Neither company has so far addressed the rumor, but it could have to do with autonomy or other software programs like driver assistance. Rivian, of course, already has its long-term deal with Amazon (AMZN), who it has a long-term delivery van order from.
Rivian had more than $9 billion in cash from its IPO at the end of 2023, so analysts will measure how far that has dwindled by quarter end. One sell-side firm says that Rivian has enough fuel to power itself through 2026.
But much of the song and dance in the earnings call will likely surround cost cutting and the outlook for demand, which has flattened for most EV makers this year. Tesla (TSLA) just reported its first ever quarter with a downtick in deliveries, for instance.
"We would anticipate FY24 guidance to be reiterated as we look for additional details surrounding incremental cost-downs/other drivers of margin improvement heading into the second half of the year," wrote the team at Truist Securities.
Other questions from analysts will likely touch on the $827 million in funding from the state of Illinois that Rivian received last week. The economic aid package will allow Rivian to expand its factory in Normal, Illinois.
"The support from the state will allow us to quickly bring our midsize SUV, R2, to market and provide even greater consumer choice for EVs," Scaringe said in a statement.
Rivian recently pilfered Javier Varela as its new chief operations officer from Volvo, where he served in a similar role.
EV stocks FAQs
Electric vehicles or EVs are automobiles that use rechargable batteries and electric motors to accelerate rather than internal combustion engines (ICEs). They have been around for more that 100 years, but battery technology research & development was meager for much of the 20th century. Lithium-ion battery technology became advanced enough to produce EVs at scale in the late 1990s and 2000s, and sales have been steadily increasing since then Tesla’s Roadster was unveiled in 2008. EVs are viewed as a means of reducing carbon emissions since battery electric vehicles (BEVs) themselves produce zero emissions. Other vehicles called plug-in hybrid electric vehicles (PHEVs) utilize both battery electric power and ICEs as a backup.
EVs are growing from a small base, but they rose from 9% of global new auto sales in 2021 to 14% of the total in 2022. This was a 65% YoY growth rate, and the industry delivered 10.2 million EVs worldwide in 2022. Projections show this number climbing above 16 million in 2023. Across the world, market shares differ greatly among nations. Nearly 88% of Norwegian new car sales in 2022 were EVs. On the other hand, the United States, where much of the modern innovation in EVs was forged, had less than 8% of new vehicle sales go to EVs in 2022. The largest EV market in the world, China, saw 30% of the market go to EVs that year.
We know you’re thinking Elon Musk, but he’s probably more like the father of the mass-market, contemporary EV. All the way back in 1827, a Hungarian priest named Anyos Jedlik invented the electric motor and used it the following year to power a vehicle of sorts. French scientist Gaston Planté invented the lead-acid battery in 1859, and German engineer Andreas Flocken built the first true electric car for the public in 1888. EVs made up about 38% of all vehicles sold in the US around 1900. They began losing market share rapidly after 1910 when gasoline-powered vehicles grew much more affordable. They largely died off until new research programs in the 1990s led to gradual private sector investment in the 2000s.
China’s BYD is by far the largest manufacturer of EVs in the world. In 2022 it sold 1.8 million EVs and in the second half of the year made up 20% of the global market. The asterisk given to BYD is that the vast majority of these vehicles are hybrids. Tesla’s 12% market share is often treated as more significant than BYD, because it only sells BEVs and is the most famous EV brand in the world. Volkswagen, BMW and Wuling then round out the top five. As a new sector with heavy investment though, many startups have flooded the market. These include China’s Nio, Li Auto and Xpeng; a Swedish-Chinese manufacturer called Polestar; and Lucid and Rivian from the US.
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Author
Clay Webster
FXStreet
Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.
