Rivian Automotive
reported a smaller loss than expected and raised full-year production guidance. That’s pretty good considering how investors feel about EVs these days. Shares were up shortly after the third-quarter results were released.
Tuesday evening, the EV start-up announced an adjusted third-quarter per-share loss of $1.19 from sales of $1.3 billion. Wall Street was 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. They want to see improvement, especially with respect to cash flow. Rivian used just under $1.1 billion in the third quarter, a little better than Wall Street had projected, and 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.
The cash numbers are OK. Production guidance looks OK too. It was raised for 2023 to 54,000 vehicles from some 52,000 vehicles. That implies about 14,300 units for the fourth quarter. Wall Street projects fourth-quarter deliveries of about 14,000 units. Deliveries and production should closely mirror one another.
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.
Shares were up 1.2% in after-hours trading. Coming into the earnings report, Rivian shares have been badly beaten up. Through Tuesday trading, Rivian shares were down about 28% over the past three months while the
S&P 500
and
Nasdaq Composite
were off about 3% and 2%, respectively.
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. Rivian’s production guidance is comforting, but investors will want to hear more about the state of the industry when management hosts a conference call at 5 p.m. Eastern time to discuss results.
Investors should brace for some more trading volatility on Wednesday. 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 third quarter with about $9.1 billion in cash and investments on its books, down from about $11.6 billion at the end of the second quarter. Rivian also sold $1.5 billion in convertible debt early in October. That isn’t reflected on the third quarter balance sheet.
With the convertible cash, Rivian has some $11 billion in cash on its books. Its entire market capitalization is about $16.5 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 roughly 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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