Rivian Stock Falls on Mixed Q1 Earnings: Key Takeaways

Rivian (NYSE: RIVN) stock is trading lower in US premarket price action today after the startup electric vehicle (EV) company reported mixed earnings for the first quarter of 2024. Here are the key takeaways from the report.

Rivian’s earnings came a day after Lucid Motors’ (NYSE: LCID) Q1 report. LCID stock fell over 14% yesterday and is languishing near its all-time lows. Startup EV stocks have been out of favor with investors amid sagging topline growth and widening losses.

Rivian Q1 Earnings

Rivian reported revenues of $1.2 billion in the quarter which was slightly ahead of the $1.16 billion that analysts expected. However, its net loss widened to $1.45 billion which was higher than consensus estimates.

Meanwhile, Rivian lowered its 2024 capex guidance by $500 million to $1.2 billion. The company has delayed the construction at its Georgia plant which would help it conserve $2.25 billion in cash. The company held $5.98 billion as cash and cash equivalents at the end of March as compared to $7.86 billion at the end of 2023.

Rivian Declined to Comment on Rumors of Apple Partnership

During the earnings call, Rivian declined to comment on rumors that Apple is looking to partner with the company. The iPhone maker has reportedly shelved its EV project that was codenamed “Titan” and is said to be looking at partners to enter the industry.

Responding to a question on the rumors of a partnership with Apple, Rivian’s CEO RC Scaringe said, “we have a history of partnership.” He touched upon the company’s digital operating system and the “opportunities for partnership” that it brings to the table.

How Analysts Reacted to RIVN’s Q1 Earnings

Barclays analyst Dan Levy reiterated his equal weight rating on RIVN and termed the stock a “show me story.” While Dan said that the company reported a “fine” Q1, he added, “Yet we believe the key test ahead for RIVN will be on the path of cost reduction – both in the near-term and in the mid-term upon the launch of R2.”

Wells Fargo analyst Colin Langan reiterated his equal weight rating on Rivian but lowered the target price by $4 to $10. Langan believes the company’s breakeven target looks “challenging.”

Notably, during the Q1 earnings call, Rivian said that it expects to achieve positive gross margins in the final quarter of this year. It might seem like a tall task considering the company lost almost $39,000 for every car it sold in Q1.

However, Rivian outlined several factors that would help it achieve a positive gross margin in Q4. It expects the tooling upgrade at its Normal factory to drive cost efficiencies. It also expects the bill of materials to fall as commodity prices have come off their highs and the company has also renegotiated agreements with suppliers.

During the earnings call, Rivian added, “Additionally, fixed costs will benefit from improved manufacturing efficiencies, reduction in our loss reserve as well as a reduction in our depreciation expense as we fully depreciate our original tooling for R1 and RCV.”

Goldman Sachs Maintained Rivian as Neutral

Goldman Sachs also maintained its neutral rating on Rivian. In a client note it said, “We maintain our Neutral rating on the stock given the high degree of competition in the EV market, which we believe could limit overall profitability/FCF growth.”

 

Startup EV Stocks Have Plunged

Startup EV stocks have plunged as investors have shunned cash-guzzling companies. Many startup EV companies have either gone bankrupt or are on the verge.

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.

Meanwhile, RIVN stock is trading almost 8% lower in early US price action today and looks set to add to its YTD losses as the woes of startup EV companies look far from over.