Rivian Automotive Insights

Electric-vehicle start-up Rivian Automotive is set to release its earnings report after the trading session closes on Wednesday. While earnings are important, there are other key factors that investors will be closely monitoring.

What Matters Most

Investors are eager to see how EV demand, pricing strategies, production efficiency, and new product launches will impact Rivian’s stock performance following the report.

Earnings Expectations

According to FactSet, Wall Street analysts anticipate a per-share loss of $1.35 and sales reaching $1.3 billion for the fourth quarter. In comparison, the company reported a per-share loss of $1.73 and sales of $663 million in the same period last year.

Sales Surge

Rivian’s sales are expected to see a significant boost, driven by a surge in deliveries during the final quarter of 2023. The company delivered 13,972 units in Q4, up from 8,054 units in the previous year. In 2023, Rivian achieved a total of 50,122 deliveries, marking a substantial increase from 20,332 deliveries in 2022.

Future Outlook

Looking ahead to 2024, analysts project sales of around 66,000 units, encompassing electric trucks, SUVs, and delivery vans sold to Amazon.com. Investors will be closely monitoring Rivian’s guidance on deliveries and production for 2024. Additionally, updates on the upcoming R2 platform slated for a 2026 debut will be crucial, as it will pave the way for more affordable vehicles to broaden Rivian’s market reach.

Market Expansion Strategy

The company’s next significant move is to tap into more of the market, given the saturation in the higher-price EV segment. In 2023, Americans purchased approximately 1.2 million all battery-electric vehicles, marking a 46% increase from the previous year. Surprisingly, over 70% of these sales were luxury vehicles. Rivian, known for its pricey models, such as the R1S SUV starting at $75,000, is facing tough competition in this space.

The Road to Affordable EVs

Excluding Tesla, which dominates the luxury EV market, only about 25% of luxury vehicle sales in the U.S. in 2023 were all-electric. The next phase for the U.S. EV industry revolves around making affordable electric vehicles accessible to a wider consumer base. However, achieving this profitability will pose a significant challenge, especially considering Tesla’s status as the sole U.S. pure-play EV maker that is consistently profitable.

Financial Struggles and Market Volatility

Estimates suggest that Rivian burned through approximately $900 million in cash during the fourth quarter of its business operations, with projections indicating a cash usage of $4.8 billion in 2024. Investors are eagerly awaiting signs of slowing cash burn, which could potentially boost market confidence.

Following the upcoming earnings report, stock market analysts anticipate significant volatility. Options markets predict a potential 14% movement in stock price, up or down. Historical data shows that shares have typically fluctuated by an average of 8% following the past four quarterly reports, resulting in three instances of stock decline.

Investor Insights and Management Call

Leading up to Wednesday’s trading session, Rivian’s stock performance has been lackluster, experiencing a 17% decline over the past year. In comparison, the S&P 500 and Nasdaq Composite indices have recorded growth rates of approximately 24% and 36%, respectively.

Investors will be keenly observing the management conference call scheduled for 5 p.m. ET on Wednesday to gain further insights into Rivian’s financial results and strategic outlook.