Rivian Stock Rises on Upbeat Q3 Results

Rivian Stock

Rivian (NASDAQ:RIVN) stock saw a 3% increase in early trading following the release of the electric truck maker’s third-quarter results, which not only exceeded expectations but also included an upward revision of its production forecast for the year and a reduction in its full-year loss projection.

From a production perspective, Rivian raised its full-year forecast from 52,000 to 54,000 units, an increase from the previous forecast of 50,000 units earlier in the year. The company attributed this adjustment to the progress achieved on its production lines, the successful ramp-up of its in-house motor line, and improvements in the supply chain. In its Q3 shareholder letter, Rivian stated, “Due to the progress experienced on our production lines, the ramp of our in-house motor line, and the supply chain outlook, we are increasing our 2023 production guidance to 54,000 total units.”

Additionally, Rivian narrowed its full-year adjusted EBITDA loss to $4.0 billion from $4.2 billion, and it reduced its 2023 capital expenditure (capex) guidance to $1.1 billion. The company also announced that it is no longer exclusively bound to sell its electric delivery vans (EDVs) solely to Amazon, which holds a stake in Rivian. Nevertheless, Rivian remains committed to manufacturing 100,000 delivery vans for Amazon under a prior agreement. The removal of exclusivity with Amazon opens up the potential for increased EDV sales, with analysts pointing to a capacity exceeding 60,000 units.

In the third quarter, Rivian reported revenue of $1.34 billion, surpassing the estimated $1.31 billion, along with an adjusted loss per share of $1.19, beating the expected $1.32. This revenue figure marked a 19.6% increase from the previous quarter’s $1.12 billion and a substantial 150% growth compared to the $536 million reported a year ago. On an adjusted EBITDA basis, Rivian reported a loss of $942 million, which was narrower than the expected $1.04 billion loss and significantly less than the $1.3 billion loss reported a year ago.

Rivian’s CEO, RJ Scaringe, emphasized the company’s focus on increasing production volume, achieving better cost efficiency, reducing material costs, and expanding commercial and go-to-market operations during the Q3 conference call.

Despite the challenges faced by other EV makers and traditional automakers like GM and Ford, who have reported shifting or decreasing EV demand, Rivian appears to be an exception with its lifestyle-oriented trucks. Rivian reported a 23% increase in Q3 deliveries compared to Q2, even after raising prices following the initial sale of lower-priced orders. Unlike Ford and GM, Rivian targets higher-income buyers in coastal areas who are less sensitive to rising prices and interest rates compared to the broader population.

However, Rivian’s path to profitability is not guaranteed, and analysts have noted the inherent risks associated with the company’s execution plan, which spans over two years, including potential delays and cost overruns.

Featured Image: Freepik

Please See Disclaimer