American electric vehicle (EV) maker Rivian (NASDAQ:RIVN) is scheduled to report its first-quarter earnings after the stock market closes on May 9. Analysts expect losses to widen in the first quarter as the company continues to burn cash.
Q1 Expectations
Last month, Rivian reported Q1 production and deliveries of 9,395 and 7,946 vehicles, respectively. Both production and deliveries jumped from the prior-year quarter but declined over 6% and 1%, respectively, from the fourth quarter of 2022. The company currently produces R1T pickup trucks, R1S SUVs, and electric delivery vans (EDV) for Amazon (NASDAQ:AMZN).
The company assured that it is on track to meet its annual production guidance of 50,000 vehicles for 2023. Nonetheless, analysts project loss per share to increase to $1.61 in Q1 2023 from $1.42 in the prior-year quarter, as higher expenses are expected to offset increased revenue. They anticipate revenue to grow 591% year-over-year to $656.65 million.
As per TipRanks’ Website Traffic Tool, visits on rivian.com declined 15.2% year-over-year in Q1 2023 and 9.3% sequentially. Lower website traffic reflects negatively on customers’ interest in Rivian’s vehicles and does not bode well for Q1 performance.
Rivian is producing low volumes on its production lines that are designed for higher volumes and is seeing negative gross profit due to significant labor and overhead costs. It expects the situation to improve as production volumes ramp up.
Rivian shares have declined over 27% year-to-date, reflecting concerns about demand and investors’ aversion to unprofitable companies amid tough macro conditions.
On April 19, RBC Capital analyst Tom Narayan downgraded Rivian stock to Hold from Buy and lowered the price target to $14 from $28. While Narayan believes that Rivian is well positioned to win market share as the industry transitions towards electrification, he sees limited near-term catalysts to boost profitability and expects margins to remain constrained.
Technical Indicators Ahead of Earnings
Ahead of the Q1 earnings release, technical indicators reveal that Rivian is a Sell. According to TipRanks’ easy-to-understand technical tool, XOM’s 50-Day EMA (exponential moving average) is 14.54, while its stock price is $13.41, making it a Sell. However, the stock’s shorter duration EMA (20-day) signals an uptrend.
Is RIVN a Good Stock to Buy?
Wall Street is cautiously optimistic on Rivian stock, with a Moderate Buy consensus rating based on 11 Buys, six Holds, and one Sell. The average price target of $26.11 suggests nearly 95% upside potential.
Conclusion
Analysts expect Rivian’s net loss per share to widen in Q1 2023, with higher expenses offsetting revenue growth. Investors look forward to management’s commentary on demand and production outlook as well as its efforts to improve profitability.
