Rivian (RIVN) Earnings Preview Q1 2022

Rivian CEO RJ Scaringe at the company’s Customer Experience Center outside of its Normal, Illinois facility on April 11, 2022.

Michael Wayland/CNBC

Electric vehicle maker Rivian Automotive will report its first-quarter results after the market close on Wednesday. Wall Street analysts polled by Refinitiv are expecting a loss of $1.44 per share on sales of about $130.5 million, but those numbers only tell a small part of the story.

The bigger story is Rivian’s outlook for the next few quarters. Like most automakers, Rivian is grappling with global supply chain disruptions that began during the initial Covid-19 lockdowns and have worsened since Russia invaded Ukraine in February. CEO RJ Scaringe warned investors in March that Rivian might not produce as many vehicles as originally planned in 2022, despite a growing backlog.

The electric truck maker could also be wondering if its biggest investors — Amazon and Ford Motor — are losing faith in the company. Rivian shares closed over 20% Monday after CNBC reported that Ford had sold eight million of its 102 million total shares of the start-up.

Here are three themes that could emerge in Rivian’s results if last week’s reports from high-profile companies in the EV space — Fisker, Nikola, and Lucid Group — provide any guidance:

The demand for all kinds of electric vehicles is very strong

Fisker, Nikola and Lucid all reported strong order books when they reported quarterly earnings last week.

Lucid said it now has over 30,000 orders for its pricey Air sedan, up from over 25,000 in the previous quarter — and that doesn’t include a recent order for up to 100,000 Lucids over the next 10 years from the government of Saudi Arabia, CEO Peter said Rawlinson.

Nikola said it has received “purchase orders, letters of intent and letters of intent” for more than 500 of its battery-electric heavy trucks. That might not sound like much, but Nikola has a lot to prove following allegations that founder Trevor Milton misled investors. (Milton denied those allegations, but they still led to his abrupt departure.) That order number is also likely to rise as more fleets evaluate Nikola’s battery-powered Tre tractor-trailer, which has received very positive reviews from customers, the company said.

As for Fisker, it now has over 45,000 reservations for its stylish Ocean SUV, which is due to launch later this year. In fact, demand is so strong that CEO Henrik Fisker said he is working with the company’s manufacturing partner, Magna International, to increase production capacity from a planned 50,000 annually to three times that by the end of 2023.

Back in March, Rivian announced it had about 83,000 reservations for its R1T pickup and R1S SUV. Investors will be curious to see where that number stands on Wednesday.

Supply chain issues remain a major challenge

Automakers of all sizes have been grappling with a global semiconductor shortage since last year, a result of rising demand for PCs and gaming devices during the Covid lockdown. More recently, the Russian invasion of Ukraine has led to shortages of certain components and increased prices for key commodities.

Fisker won’t start production until mid-November, but both Lucid and Nikola have already had to reset expectations for this year’s production totals. In February, Lucid lowered its full-year production forecast to 12,000-14,000 from 20,000 vehicles. The lack of chips was a factor in that decision, Rawlinson said, but so was the lack of more everyday materials like glass and carpet. Lucid reiterated that forecast in last week’s earnings report.

Nikola could likely sell a few more than 500 trucks this year due to demand, but expects only 300 to 500 to be built due to parts shortages. Although further expansions are underway, Nikola’s Arizona plant already has the capacity to build 2,500 trucks per year. But the company isn’t confident it can secure enough chips — particularly control units for its battery modules, CEO Mark Russell told investors on Thursday.

Likewise, Rivian has lowered its production forecasts for 2022. In March, the company said it would build 25,000 vehicles this year, down from the 50,000 it forecast at its IPO roadshow presentation last year. Wall Street will be looking for an update on production capacity when the company reports this week.

Raising more money will be complicated

As Tesla investors know, raising money when a company’s stock price is high isn’t difficult. But when the stock is under pressure, raising funds can be a challenge.

With shares of Nikola down about 90% from their 2020 peak, the company has had to exit deals with private funds to raise money on unfavorable terms. In its most recent transaction, announced last week, a private investor agreed to buy $200 million in convertible bonds that pay 8% interest if Nikola pays back in cash and 11% if it’s in shares repays.

Lucid still has plenty of cash from the deal that took it public, nearly $5.4 billion, Chief Financial Officer Sherry House said Thursday. But with big plans to expand its own factory in Arizona and a proposed second factory in Saudi Arabia — totaling $2 billion in planned investments in 2022 — even relatively well-funded Lucid could need more money before it gets it can lead to sustainable profitability. If the stock price isn’t rising, it can be difficult to pull off a multi-billion dollar raise without significantly diluting existing shareholders.

Fisker said it still has about $1 billion in cash, but much of that is earmarked for costs related to ramping up production of its Ocean SUV. Chief Financial Officer Geeta Gupta-Fisker said she expects Fisker’s operating and capital expenditures this year to be between $715 million and $790 million.

At this rate, Fisker may need to raise $1 billion or more in additional capital as early as the second quarter of 2023 — and like Lucid, the stock is a long way from its highs, which will make a large secondary offering challenging.

But unlike its peers, Rivian won’t have to worry about cash anytime soon. At the end of 2021, the company had a whopping $18.4 billion and announced in March that it expects to burn about $8 billion through the end of 2023 while it works to ramp up production of the R1S, R1T, and an electric van boot up for Amazon.

That cash benefit could be the edge Rivian needs to revitalize its stock price in an EV landscape faced with production challenges.

Correction: This article has been updated to clarify that Fisker has over 45,000 reservations for its electric SUV Ocean. A note on stock performance was also updated to correct that Nikola stock is down about 90% from its 2020 peak.

https://www.cnbc.com/2022/05/09/rivian-rivn-q1-2022-earnings-preview.html Rivian (RIVN) Earnings Preview Q1 2022

Jane Marczewski

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