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Rivian Inventory Rises on Q1 2023 Earnings Beat: Key Takeaways

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Rivian inventory (NYSE: RIVN) is buying and selling greater in US worth motion in the present day after it posted better-than-expected earnings for the primary quarter of 2023 and in addition maintained its 2023 steerage. Listed below are the important thing takeaways.

Rivian reported revenues of $661 million within the March quarter which had been forward of $652 million that markets anticipated.

Rivian produced 9,395 automobiles within the first quarter of 2023 and delivered 7,946 of those. The deliveries had been largely consistent with estimates however each the manufacturing and deliveries fell as in comparison with the fourth quarter.

Rivian beats Q1 2023 earnings estimates

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Rivian posted a per-share lack of $1.25 which was narrower than the $1.59 that analysts anticipated. It additionally maintained its 2023 manufacturing steerage of fifty,000 items.

In his ready remarks, RJ Scaringe mentioned, that the corporate’s 2023 priorities are “unchanged.” He added, “The staff stays targeted on ramping manufacturing, driving price reductions, creating the (upcoming) R2 platform and future applied sciences and delivering an excellent end-to-end buyer expertise.”

Rivian’s earnings and the market’s response are in stark distinction to Lucid Motors which launched its earnings a day earlier than.

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Not solely did Lucid Motors miss each topline and bottomline estimates for the quarter – but in addition lowered its 2023 supply steerage.

The Peter Rawlinson-led firm now expects to provide “over 10,000” automobiles in 2023 whereas the earlier steerage was between 10,000-14,000 items.

Lucid Motors is battling demand points and Rawlinson reaffirmed that the corporate must work on its model consciousness.

RIVN on demand issues

Responding to an analyst query on the demand for RIVN automobiles, CEO Robert Scaringe mentioned that the corporate’s order backlog extends “properly into 2024” – reiterating what he mentioned through the earlier earnings name.

Notably, each Rivian and Lucid Motors have stopped offering reservation numbers which markets see as an indication of tepid demand.

He added, “the engagement we now have with prospects and the extent of satisfaction that our early prospects the primary 35,000-or-so prospects are having actually creates a robust flywheel the place our largest, and I’d say, most essential advocates are the patrons of our automobiles.”

Rivian is trying to reduce prices

Like fellow startup EV firms, Rivian continues to burn money and posted unfavorable free money flows of $1.8 billion in Q1 2023 – wider than the $1.45 billion within the corresponding quarter final yr.

Amongst others, a rise in stock was a drag on money flows even because it was considerably compensated by decrease capex within the quarter.

Rivian ended the quarter with $11.78 billion in money which excludes the $1.5 billion revolving credit score facility.

In the course of the quarter it raised $1.5 billion in money by means of the sale of convertible bonds. Given the perennial money burn, startup EV firms have needed to elevate money at frequent intervals to maintain their operations operating.

Beforehand, Rivian mentioned that it has sufficient money to fund its operations till 2025.

RIVN maintained its steerage

Aside from the deliveries, Rivian additionally reaffirmed its 2023 adjusted EBITDA steerage of $4.3 billion loss and capex of $2 billion.

Additionally, Rivian mentioned that it nonetheless expects to turn into gross revenue constructive by the subsequent yr. The corporate mentioned that the rise in capability utilization would drive half of the incremental margin growth.

The remaining half it mentioned could be break up between greater car costs and decrease uncooked materials prices.

Notably, all these elements are key headwinds for Rivian. A number of its orders had been positioned earlier than it hiked car costs. The corporate did attempt to cross on the value enhance on pre-orders however backed off after patrons protested.

Additionally, it has buy contracts at greater costs. Uncooked materials prices have fallen considerably during the last yr and Rivian mentioned that it’s negotiating with suppliers for higher phrases.

Amazon is RIVN’s largest stockholder

Rivian is concentrating on a complete annual manufacturing capability of round 600,000 automobiles between its Regular and Georgia vegetation. It aspires to seize 10% of the worldwide automotive market share which could appear a tall ask contemplating the huge competitors.

The corporate is presently producing the R1T pickup, R1S SUV, and EDV (electrical supply van). On the upcoming manufacturing facility in Georgia, Rivian would produce the inexpensive R2 the place manufacturing is slated to start in 2026 – one yr behind the unique schedule.

Notably, Amazon is the biggest Rivian stockholder and has positioned an order for 100,000 EDVs with the corporate.

In response to an analysts’ query on whether or not Rivian is trying to promote EDVs to different prospects additionally, Scaringe mentioned, “we’re, at this level, proceed to focus from a manufacturing standpoint on actually the only buyer with Amazon. And by way of wanting past the exclusivity into different prospects, we do see a broad set of wants within the business area.”

He added, “it’s been one thing we’ve been working very intently with Amazon on to permit us to pursue these different prospects as rapidly as doable.”

EV competitors

In the meantime, the competitors within the EV trade is growing, and Rivian faces robust competitors from Common Motors’ Silverado and the GMC Hummer, and Ford’s F-150 Lightning.

The electrical pickup phase remains to be a pretty proposition because the competitors shouldn’t be as excessive as sedans and SUVs. Additionally, Tesla which has been on the forefront of the value battle nonetheless doesn’t have an electrical pickup. The Elon Musk-run firm expects to start the deliveries of its Cybertruck later this yr however doesn’t anticipate mass manufacturing till 2024.

in an obvious reference to Tesla, analyst John Murphy of Financial institution of America requested Rivian whether or not the corporate would take into account a “lifetime income alternative” from the car and promote at a lower cost now and make income from different streams sooner or later.

Scaringe responded, “that we definitely see as a part of the enterprise in the long run. And above and past self-driving, there are different alternatives to create significant recurring income. And a few of these, we’ve began to launch and initiated already with our insurance coverage product, with among the financing merchandise that we now have.”

In the meantime, the value battle took a toll on Tesla’s margins within the first quarter and the inventory fell after the earnings launch. Most different EV firms together with Lucid Motors, Nikola, and Fisker additionally disillusioned with their Q1 2023 earnings.

Rivian in the meantime managed to impress markets with its first quarter earnings and the inventory is greater in the present day.

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