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Rivian (RIVN) Q3 2022 earnings preview

Rivian ($RIVN) is ready to ship its third-quarter earnings Wednesday, November 9, after the bell because the EV maker comes underneath the microscope into yr’s finish. Can Rivian proceed increasing operations, or will inflationary stress gradual its momentum? On this Rivian Q3 earnings preview, I’ll talk about what to search for because the EV startup makes an attempt to ascertain its place within the rising electrical automobile market.

Rivian Q3 deliveries and updates

Rivian started deliveries of its R1T electrical pickup in September 2021, adopted by the R1S and EDV electrical supply van later that yr.

Greater enter costs because of inflation brought on the automaker to increase costs in March 2022, which brought on some consumers to cancel their orders.

On the finish of the second quarter, the automaker introduced it had produced 4,401 autos (+72% QoQ) and delivered 4,467 EVs, a rise of 264% from Q1. Rivian additionally confirmed on the time it was on observe to attain its prior steering of manufacturing 25,000 EVs in 2022.

Rivans internet backlog for its R1T pickup grew to round 98,000 as the typical every day preorder charge rose within the second quarter.

In October, Rivian introduced it produced 7,363 electrical autos at its Regular, Illinois plant and delivered 6,584 EVs throughout the third quarter ending September 30, 2022.

Amazon confirmed yesterday that the e-commerce large will roll out over 1,000 Rivian EDVs this vacation season as a part of its 100,000 orders to be accomplished by 2025. The partnership ought to assist complement Rivian with money stream because it scales manufacturing over the following few years.

On the identical time, a number of macroeconomic elements are inflicting stress on startups and the auto trade normally. Rising rates of interest and labor are slicing into already tight revenue margins whereas inflicting debt to turn into dearer over time.

Rivian R1T electrical pickup Supply: Rivian

Rivan’s monetary scenario

Rivian generated $364 million in income within the second quarter, primarily pushed by EV deliveries. In the meantime, ramping up manufacturing and launching new EV platforms is expensive, as Rivian recorded a gross lack of $704 million. Claire Mcdonough explains on the corporate’s Q2 earnings name:

Concurrently launching two automobile platforms and manufacturing traces is a fancy course of with excessive fastened prices related to the labor and overhead required to run our large-scale plant, which might assist 150,000 models of annual capability.

Altogether, Rivian posted a internet lack of $1.7 billion as working bills reached over $1 billion. To compensate, the corporate says it can concentrate on “optimizing our product street map and related working bills,” slicing capital expenditure steering by $600 million.

Concerning the steadiness sheet, Rivian ended the second quarter with $15 billion in money, noting they “stay assured in our path to launch the R2 automobile platform” with the money readily available. In the meantime, the corporate’s complete debt climbed to $1.65 billion.

To spice up manufacturing, Rivian did be aware it is going to be including a second shift for normal meeting.

Rivian Q3 earnings preview: What to look out for

One of many greatest issues traders can be searching for is demand. Is Rivian’s backlog rising, and is the typical every day preorder charge nonetheless rising?

If Rivian is on observe to hit its 2022 manufacturing purpose of 25,000, it will point out an enchancment in Q3 and This fall manufacturing ranges. The corporate produced 6,954 within the first half of the yr, which means they should obtain over 18,000 within the second half.

Steering is all the time a crucial issue to regulate. With rising enter prices, can Rivian keep and construct upon its momentum? Or will the altering macroeconomic setting show to be an excessive amount of?

The very last thing to look at for is any updates on the R2 platform. Rivian stated that though its R1 fashions gained’t meet the value threshold to obtain tax credit supplied by the Inflation Discount Act, its R2 product line is being developed “to permit our clients to seize the worth of those incentives.”

Rivian inventory worth is down over 70% this yr, like many unprofitable progress corporations. If Rivian needs to get again on observe, it should present it could handle its debt whereas persevering with to construct its manufacturing capabilities. The Amazon EDV backing ought to assist, but it surely wants to point out it has what it takes to compete within the extremely aggressive EV market to get traders again on board. Doing so will imply trimming debt, constructing money stream, and getting margins underneath management.

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