Rivian Stock Up Strong In Premarket As Earnings Loom After Market Close

Investors and market spectators are closely monitoring Rivian Automotive (NASDAQ: RIVN) as it strides into the Q1 earnings season, facing amplified industry challenges that intertwine with demand flow and operational barriers. Rivian, a relatively new player in the automotive industry, who went public in 2021. The company's impressive market cap sits at $10.28 billion, a small but mighty competitor to auto giants General Motors and Ford.

Rivian’s current share price teeters around $10 per share. It's share price went rose 2.58% yesterday, and in the premarket session, has increased a very strong 7.07%. What can today's trading session bring for the electric vehicle (EV) giant following their eagerly anticipated earnings report after market close?

Rivian’s journey has been complicated somewhat by supply chain disruptions, an ailment plaguing various global industries but hitting the auto sector with particular ferocity. The company has had to recalibrate its production targets as these supply issues temper its manufacturing capabilities. This realignment was reflected in its most recent quarterly update; in the first quarter of 2024, Rivian manufactured 13,980 vehicles and sold 13,588, slipping below its previous quarter's delivery figures.

The manufacturer reported a loss from operations at a staggering $5.74 billion for the year 2023, juxtaposed against a year-end total liquidity position of $10.47 billion. These numbers paint a picture of a company burning through cash at a voracious rate, yet maintaining a cushion of liquidity essential for its survival and progressive development.

Looking forward into 2024, Rivian anticipates a loss before interest, taxes, depreciation, and amortisation (EBITDA) at around $2.7 billion. The company emphasises that cost optimisation efforts are underway, with the intention of tapering these losses to manageable levels.

In a push to innovate and expand, Rivian has sketched out a roadmap for its future, detailing the introduction of new vehicle models R2, beginning production in late 2026, with models R3 and R3X to follow successively. These launches are slated to not only augment Rivian's portfolio but also to strengthen its competitive position in an increasingly crowded EV marketplace.

Encouragingly for Rivian, projections indicate a notable uptick in revenue for the first quarter of 2024, to a projected $1.15 billion, showcasing a significant 73% year-over-year growth. However, the company is currently trading at a forward sales multiple of 1.75, coupled with a Value Score of ‘F', which suggests that the financial foundations remain shaky. The estimate consensus paints a sobering picture for full-year 2024, with expected losses per share of $3.97, exceeding the previous year's loss. However, this is set against a backdrop of hoped-for revenue growth.

Analyst Sentiments (NASDAQ: RIVN)

Investors might ordinarily see the robust projected revenue uptick and expansion plans as indicators to buy, but the underlying figures suggest a cautionary approach.

The consensus among market analysts would warrant a period of observation, particularly to allow Rivian’s upcoming quarterly results to provide further clarity on the effectiveness of cost reductions, the impact of supply chain issues on production, and the progress toward upcoming model introductions.

Considering the breadth of factors at play, stakeholders and prospective investors may find it prudent to wait on the unfolding of Rivian's Q1 earnings before committing capital. Indeed, with the company balancing on the high-wire of operational excellence and financial stewardship, every metric and strategic move disclosed in these earnings will be critical in assessing whether Rivian's stock is worth betting on in an EV market fraught with potential yet peppered with pitfalls.