Rivian Automotive Inc. is slated to update investors about its quarterly earnings on Tuesday after the bell.
And Rivian
RIVN,
executives have some explaining to do: The company last month surprised Wall Street by offering $1.5 billion worth of convertible debt, a move that was swiftly condemned as a “gut punch to investors.”
Rivian is also about to face more competition: Tesla Inc.
TSLA,
announced in October that it has penciled in Nov. 30 as the date it will start selling the Cybertruck, its unconventional-looking electric pickup.
The futuristic Tesla truck might not be direct competition with Rivian’s pickups and SUVs, which are marketed for the outdoors and rugged terrain, but it may eat away at the pool of those who desire, and can afford, a Rivian EV.
Rivian’s cheapest vehicles start at around $73,000, although the automaker is developing a second-generation vehicle that presumably will be cheaper.
Here’s what to expect from the EV maker:
Earnings: Analysts polled by FactSet expect Rivian to narrow its per-share quarterly loss to $1.34, which would compare with a loss of $1.51 a share in the third quarter of 2022.
Revenue: Sales are seen topping $1 billion for the second quarter in a row, with the analysts surveyed by FactSet looking for $1.32 billion. That would compare with $536 million a year ago.
Stock movement: Rivian shares badly have underperformed the broader equity market. So far this year, the stock is down more than 7%, and has lost more than 47% in the past 12 months. That contrasts with an advance of more than 13% and of about 16% for the S&P 500 index
SPX
in the same timeframes.
What else to expect: After investors were “blindsided” by the convertible notes offering in early October, “the focus will be on the company’s cash burn rate,” said CFRA analyst Garrett Nelson.
Also high on the list is any comment around demand for Rivian’s R1T, an electric pickup truck, and the R1S, an electric SUV, “amid signs of a significant slowdown in EV demand,” as well as capex costs and details related to Rivian’s new manufacturing plant near Atlanta, he said.
Ivana Delevska, founder and chief investment officer officer of Spear Invest, agreed that the cash burn and path to positive margins is at the center of Tuesday’s report and call with analysts. Rivian has guided for positive gross margins in 2024.
“While the macro environment and high interest rates are a significant concern for autos, Rivian is a niche manufacturer with a strong order book,” Delevska said. “We, therefore, believe that the benefits on the costs side will exceed the risk of topline pressure, as the company is a relatively niche player.”
Moreover, Rivian is likely to benefit from lower raw-material costs and favorable pricing on components, she said.
The company showed “strong” third-quarter sales and production figures, she said, and some questioned why it didn’t revise its guidance.
Management “is being appropriately conservative in a tough macro. We don’t expect a meaningful topline upside, but we expect the cost side to surprise to the upside,” she said.
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