Shares of Rivian Automotive (NASDAQ: RIVN) were up 5.6% in the extending trading hours on Wednesday, May 11, as the American electric vehicle maker posted lower-than-expected loss and reaffirmed its 2022 production guidance. Shares were up 2.4% in Thursday’s pre-market trading at the time of writing.
Rivian shares have tanked 80% year-to-date due to supply chain pressures and other macro woes as well as company-specific issues, including a 50% cut in production guidance to 25,000 vehicles announced in March.
On Wednesday, Rivian reiterated its 2022 production outlook of 25,000 units. It expects adjusted EBITDA loss of $4.75 billion in 2022.
Ahead of the results, Ford Motor (F) sold 8 million shares of Rivian for $214 million in proceeds. According to Reuters, Ford now holds about 94 million Rivian shares, reflecting a 10.5% stake.
Q1 Results in Detail
Rivian’s Q1’22 revenue came in at $95 million, lagging the consensus analysts’ estimate of $130.5 million. The company built 2,553 vehicles in the quarter and delivered 1,227.
Rivian’s net loss widened to $1.59 billion from $414 million in Q1’21 due to higher labor and overhead costs, costs stemming from supply chain challenges, and growth investments. That said, adjusted net loss per share of $1.43 was better than a loss of $4.10 in the prior-year quarter mainly due to a higher share count. Analysts were expecting a loss per share of $1.44.
Other Key Takeaways
Rivian will continue to prioritize ramping production in its Normal, Illinois production facility to meet robust demand. The company has produced nearly 5,000 vehicles since starting production, including R1T pickup trucks, R1S SUVs, and EDV or Electric Delivery Vans for Amazon (AMZN), which is also a shareholder. Rivian’s long-term goal is to capture over 10% of market share.
As of May 9, the company had over 90,000 net preorders for its R1 vehicles from consumers in the U.S. and Canada, providing investors with a clear visual of its possible future revenues.
Rivian cautioned investors about persistent supply chain bottlenecks. The company revealed that since the end of the first-quarter, it has been “forced to stop production for longer periods than anticipated,” leading to almost one-fourth of the planned production time being lost.
Wall Street’s Reaction
Following the print, Mizuho analyst Vijay Rakesh commented, “We believe ramping production/deliveries is KEY, with our expectations for F24E/F25E deliveries at 165k/311k units, as both demand and competition (F150 Lightning, Silverado EV, Hummer EV) for EV trucks continue to grow.”
Rakesh cut his price target to $80 from $90 to reflect lower estimates but reiterated a Buy rating as he continues to believe that Rivian is well-positioned as a strong pure-play EV name. That said, he feels that the company could continue to be a “show-me-the-money” story until it delivers on its strategic plans.
Overall, the Street is cautiously optimistic on Rivian, with a Moderate Buy consensus rating based on nine Buys, five Holds and one Sell. The average Rivian price target of $65.31 implies 217.04% upside potential from current levels.
Conclusion
Supply chain constraints continue to hamper Rivian’s production, but it is still optimistic about meeting its annual production outlook. Investors will be keenly watching Rivian’s future announcements and any unfavorable updates on production or deliveries could drag down the stock further.
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