Rivian Stock Spikes as Second Quarter Deliveries Smash Estimates

Rivian stock (NYSE: RIVN) rose over 17% yesterday and had its best day in eight months after it reported better-than-expected production and delivery numbers for the second quarter of 2023.

Rivian stock has now turned positive for 2023 even as its returns trail that of Tesla which has gained over 150% so far.

Tesla stock also soared yesterday after its second quarter deliveries came in ahead of estimates.

Rivian impressed markets with its second quarter delivery report

Rivian produced 13,992 vehicles in the second quarter and delivered 12,640 of those. Analysts were expecting the EV company to deliver 11,000 vehicles in the quarter.

It maintained its 2023 production guidance of 50,000 vehicles. While Rivian missed its production guidance last year, it looks set to meet its 2023 guidance as it has already produced 23,387 cars in the first half of the year.

The company currently sells R1T pickups and R1S SUVs and is also building electric delivery trucks for Amazon, which is its biggest shareholder.

While Rivian sells its cars online, last month it held a sales event in the parking lot of its Normal factory to sell R1T trucks. The company meanwhile clarified that it did not offer any discounts at the sales event.

Rivian is expanding its capacity

Rivian currently has one plant in Normal in the US. It is looking to set up a second plant in Georgia which would have an annual capacity of 400,000 cars. The company expects to roll out vehicles from the plant, which would be built at a cost of $5 billion, in 2024. Rivian expects to have a total production capacity of 600,000 cars between the two plants.

It delayed the timeline for the affordable R2 vehicle platform by a year to 2026. The model would help Rivian scale up production.

The company however expects an adjusted EBITDA loss of $4.3 billion in 2023 and expects to post positive gross profits only by the next year.

Other EV startups are also struggling with losses and even the EV business of legacy automakers is in the red. Ford expects its EV business to lose $3 billion this year while General Motors does not expect its EV segment to turn profitable before 2025.

Nasdaq 100 removed RIVN stock

Last month, Nasdaq 100 removed Rivian stock. It also removed the stock from the Nasdaq-100 Equal-Weighted index, the Nasdaq-100 ESG index, and the Nasdaq-100 Ex-Tech sector index.

While the Nasdaq had its best first-half performance in four decades, Rivian stock was in the red as markets grew wary of loss-making EV companies.

When Rivian listed in 2021, it became the biggest listing since Facebook’s 2012 listing. Rivian’s IPO sailed through easily and the company priced the shares at $78 each, which was above the already increased price range. The stock had a good listing and went on to hit an all-time high of $179.47, which was over twice the IPO price.

At its peak, Rivian commanded a market cap of over $150 billion. Many saw it as a sign of optimism towards pure-play EV companies. However, there were skeptics, which included Tesla’s CEO Elon Musk, who found the valuation too high

The company’s market cap is now just above $18 billion. To put that in perspective, it had $11.8 billion as cash and cash equivalents on its balance sheet at the end of March.

EV startups are burning a lot of cash

EV startups are burning a lot of cash and need a continuous supply of fresh capital to bridge the gap. In May, Lucid Motors completed a $3 billion stock sale which was preceded by a $1.5 billion stock sale late last year also.

Arrival has also raised capital in order to fund its operations. It eventually opted for a second SPAC merger to raise more funds.

Nikola has also been on a stock-selling spree. It was looking to increase the share count further but could not garner enough votes to get for the proposal. It has now reconvened the annual meeting to get the proposal through.

Rivian also raised $1.3 billion through a convertible issue earlier this year. The company raised almost $12 billion in its blockbuster IPO and had $18.4 billion as cash on its balance sheet at the end of 2021.

However, the cash pile has gradually come down amid the continued cash burn toward both operating losses and capex.

Lordstown Motors filed for bankruptcy

Last month, Lordstown Motors filed for bankruptcy after Foxconn walked out from the funding deal. Several other EV startups are fighting a survival battle amid execution woes and intensifying competition.

Rivian is among the relatively well-funded EV companies and also has the backing of Amazon.

Wall Street analysts on Rivian stock

Last month, Canaccord reiterated Rivian stock as a buy and said, “While Rivian’s operational issues since its 2021 IPO have proven frustrating, its vehicles remain highly desirable and well-reviewed. We see the operational clouds breaking as production ramps and financials improve.”

Rivian reported better-than-expected earnings for the first quarter of 2023. Not only were its revenues higher than what the market was expecting but its losses were also narrower than what analysts predicted.

The company has scheduled its Q2 2023 earnings on August 8 and markets would look for comments on 2023 guidance as well as Rivian’s capital raise plans.