Rivian (RIVN) Earnings Preview for Q1 2022

Rivian CEO RJ Scaringe inside the company’s Customer Experience Center outside its plant at Aptil 11, 2022 in Normal, Ill.

Michael Wayland/CNBC

electric vehicle maker Rivian Cars It will report first-quarter earnings after the market closes on Wednesday. Wall Street analysts polled by Refinitiv expected a $1.44 per share loss in revenue of about $130.5 million — but those numbers are likely to be just a small part of the story.

The bigger story is Rivian’s outlook for the next few quarters. Like most automakers, Rivian has been plagued by global supply chain disruptions that began during the initial Covid-19 lockdowns and have worsened since Russia’s invasion of Ukraine in February. CEO RJ Scaringe Investors warned in March That Rivian won’t be able to produce as many vehicles in 2022 as originally planned, despite a ballooning order book.

The electric truck maker may also face questions about whether its biggest investor – Amazon And Ford Motor – They lose confidence. Rivian shares fell more than 15% Monday after the CNBC report Ford sold 8 million Of the total 102 million shares of the startup.

Here are three topics that might appear in Rivian’s results, if there were reports last week from high-profile companies in the EV space – FiskerAnd NicolaAnd Lucid Group – Provide any instructions.

The demand for all kinds of electric vehicles is very strong

Fisker, Nicola, and Lucid all reported strong order books when they released quarterly results last week.

Lucid said It now has more than 30,000 orders For an expensive Air Sedan, starting from 25000 last quarter — and that does not include a recent order of up to 100,000 Lucids over the next 10 years from the government of Saudi Arabia, CEO Peter Rawlinson said.

Nicolas said he had received “purchase orders, letters of intent and memoranda of understanding” for More than 500 of its heavy duty battery electric trucks. This may not sound like much, but Nicola has a lot to prove beyond Allegations that founder Trevor Melton misled investors. (Milton denies the allegations, but she nevertheless caused it precipitate departure.) That number is also likely to grow as more fleets have a chance to rate Nikola’s battery-powered Tre semitruck, which has received strong positive reviews from early customers, the company said.

For Fisker, she now has more than 40,000 reservations for her stylish Ocean SUV, which is due for launch late 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 50,000 plans per year to as much as 150,000 per year by the end of 2023.

Back in March, Rivian said it happened About 83,000 reservations For pickup R1T and R1S SUV. Investors will be excited to see where that number stands on Wednesday.

Supply chain issues remain a major challenge

Carmakers of all sizes have suffered from a global shortage of semiconductor chips since last year, as a result of increased demand for PCs and game consoles during the Covid lockdowns. Recently, the Russian invasion of Ukraine led to a shortage of some components and a rise in the prices of basic commodities.

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

Nikola will likely sell just over 500 trucks this year on demand, but expects to build only 300 to 500 due to a lack of parts. Although other expansions are underway, the Nikola plant in Arizona already has the capacity to build 2,500 trucks annually. The problem is that the company isn’t confident it can secure enough chips — specifically, the controllers for its battery units — CEO Mark Russell told investors Thursday.

Likewise, Rivian has already lowered its production forecast for 2022. It said in March that it expected to build 25,000 cars this year, down from the 50,000 it forecast in its IPO promotion last year. Wall Street will be looking for an update on production capacity when the company reports this week.

Collecting more coins will be complicated

Like Tesla Investors know that raising cash is not difficult when a company’s stock price is high. But when the stock is under stress, raising money can be challenging.

With Rivian stock down nearly 90% from its 2020 high, the company has been forced to strike deals with private funds to raise funds on less than favorable terms. In its latest deal, announced last week, a private investor agreed to buy $200 million in convertible bonds — notes that will pay 8% interest if Nikola pays off cash, and 11% if he pays back in stock.

Chief Financial Officer Cherry House said Thursday that Lucid still had plenty of cash from the deal that went public, at nearly $5.4 billion. But with big plans to expand its own plant in Arizona, and a second plant planned in Saudi Arabia – with a total of $2 billion in capital expenditures planned for 2022 – the relatively wealthy Lucid may find itself in need of even more cash before it can get its hands on the cash. on her. for sustainable profitability. Unless its share price rises, it may be difficult to achieve a multibillion-dollar increase without significantly weakening existing shareholders.

Fisker said he still has about $1 billion in cash, but much of that is for costs related to starting production of its Ocean SUV. Gita Gupta Fisker, the company’s chief financial officer, said she expects Fisker’s total operating and capital expenditures to reach between $715 million and $790 million this year.

At that rate, Fisker may need to raise $1 billion or more in additional capital as soon as the second quarter of next year — and like Lucid, its stock is far from all-time highs, which will make a major secondary offering a challenge.

Unlike its competitors, Rivian may not need to worry about cash any time soon. It had $18.4 billion at the end of 2021, and said in March that it expects to burn about $8 billion through the end of 2023 as it ramps up production of R1S, R1T and an electric delivery truck for Amazon.

This cash edge may be the one Rivian needs to revive its share price in the production-challenged EV landscape.

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