Rivian Earnings (RIVN) : What To Expect As Landscape Shifts

In the rapidly evolving electric vehicle (EV) market, Rivian Automotive, a major contender, has been making significant strides and encountering challenges alike. As the third-quarter financials approach today, analysts are casting a cautious gaze upon Rivian in light of recent changes.

The headline expectations out of today's earnings are :

• Revenue Expected – $1.01 Billion, Previous Q $1.16 Billion
• EPS Expected – (-$0.90). Previous Q, (-$1.13)

With Donald Trump set to be the next President of the United States, the outlook for EVs has been questioned, with grants and funding potentially set to decrease. Competitor Tesla (TSLA) has been seen as a potential beneficiary, with TSLA's stock adding 14.75% in trading on the day of declaration, as Rivian's stock price (RIVN) fell 8.31%.

On a year-to-date basis the picture has been similarly difficult for holders, with Rivian having shed 53.98% of it's stock price, with Tesla's recent rally pushing their stock green on the year, up 16.15%.

Financial projections reveal that Rivian anticipates a full-year adjusted loss before interest, taxes, depreciation, and amortization (EBITDA) of $2.7 billion. This comes alongside planned capital expenditures amounting to $1.2 billion.

Notably, the company, renowned for manufacturing Amazon's electric delivery vans, has achieved a remarkable milestone, delivering more than 800 million packages across the United States. Amazon, Rivian's largest shareholder, holds a 15% stake in the EV maker, which translates to 158.4 million shares.

However, Rivian was compelled to pause production of its electric vans for Amazon back in August due to a parts shortage, a disruption that led to a downward revision of the company's full-year production guidance. Revenue is expected to come in at $1.01 billion, down from $1.16 billion in the previous report. This would in fact mark the 4th consecutive quarter of revenue declines, albeit against a backdrop of improving EPS.

The EV manufacturer has since updated its annual production estimate, projecting a range of 47,000 to 49,000 vehicles. This figure stands in contrast to the 57,000 units previously affirmed. During the third quarter of 2023 alone, Rivian managed to manufacture 16,304 vehicles.

Concrete measures to achieve profitability include aggressive cost reductions, aiming for material cost reductions by 20% on existing vehicles and a notable 45% on the upcoming R2 models. Such strategies are part of Rivian's broader goal of achieving positive gross margins by the fourth quarter of 2024.

In the third quarter, Rivian's delivery tally rose to 10,018 vehicles, contributing to a total of 37,396 units for the year 2024 so far. This effort pales in comparison to Tesla's output, as the EV industry leader delivered 462,890 vehicles in the same quarter, marking a 6% year-over-year increase.

These industry-wide comparisons and company-specific challenges have prompted analysts to adjust their perspectives on Rivian. Stock price targets have dropped, reflecting the ongoing hurdles and a guarded outlook for the U.S. electric vehicle market. In a notable example, RBC Capital diminished its price target on Rivian to $14, flagging potential downside risks and alluding to uncertainties surrounding its partnership with Volkswagen.

As Rivian marches towards its Q3 earnings report, investors and market watchers will be keenly observing outcomes and discerning the firm's pathway through the complex terrain of the electric vehicle domain.