What are Markets Expecting from Rivian’s Q4 2022 Earnings

Rivian (NYSE: RIVN) would release its earnings for the fourth quarter of 2022 tomorrow. Here’s what markets are expecting from the company’s earnings report.

Rivian stock is down 6% for the year and is not far from its all-time low of $15.28. The stock’s price action has diverged from Tesla this year which has gained almost 60% YTD and is the second-best performing S&P 500 stock.

Even Lucid Motors stock has gained 25% YTD. However, more than anything related to the core business, rumors of Saudi Arabia acquiring the company have led to a rally in the stock.

Lucid Motors stock crashed last week

Lucid Motors’ rally meanwhile faltered last week after it reported dismal earnings for the fourth quarter of 2022. Not only did it miss revenue estimates for the quarter but also reported a fall in its reservation numbers. Furthermore, it guided for 2023 production between only 10,000-14,000, which is below its capacity.

Markets were anyways concerned about the demand for Lucid cars as it is offering a $7,500 credit for select models.

Rivian to report Q4 earnings: What to expect

Coming back to Rivian, analysts expect the company to report revenues of $729 million in Q4, a YoY rise of 1,250%. The massive YoY rise is due to the lower base effect as it is just over a year since Rivian began delivering its cars.

In the fourth quarter of 2022, Rivian produced 10,020 cars and delivered 8,054 of these. In 2022, Rivian produced 24,337 vehicles which were below the company’s guidance of 25,000 cars. Notably, the company’s guidance was anyways half of the original guidance of 50,000 cars. Many EV companies lowered their 2022 guidance amid supply chain woes.

Now, when supply chain woes have eased, EV companies seem to be facing demand woes. During Lucid Motors’ Q4 2022 earnings call, CEO Peter Rawlinson said, that not many people are aware of Lucid Motors brand as well as the cars. He added, “We need to amplify that message and broaden the awareness, which in turn will drive sales. And that is the focus right now.”

EV demand in focus

During Rivian’s Q4 2022 earnings call, markets would look for commentary on demand. During the Q3 2022 earnings call, Rivian said that it had 114,000 pre-orders which was higher than the 98,000 preorders that it reported in the previous quarter.

After the drop in Lucid Motors’ reservation numbers, markets would look forward to Rivian’s preorders. Incidentally, after two quarters of falling reservations, Lucid Motors said that from now on it won’t provide the reservation numbers.

Meanwhile, Lucid Motors’ current portfolio is different from that of Rivian. While Lucid Motors currently sells the luxury Air sedan, Rivian currently has two models, the R1T pickup truck and the R1S sports SUV. It is also producing delivery vans for Amazon. It delayed the timeline for the affordable R2 vehicle platform by a year to 2026.

Markets await 2023 guidance from Rivian

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.

Meanwhile, during Rivian’s Q4 2022 earnings call, markets would look out for 2023 production guidance.

Last month, Tesla said that it expects to produce 1.8 million cars in 2023 which is a YoY growth of just around 31%. During the earnings call, Tesla’s CEO Elon Musk said that while its internal production goal is 2 million cars, it is providing conservative guidance.

He said,” I don’t know, there just always seems to be some freaking force majeure thing that happens somewhere on earth. And we don’t control if there’s like earthquakes, tsunamis, wars, pandemics, et cetera.”

Musk says demand for Tesla cars is strong

There have been concerns over the demand for Tesla cars. Musk began the earnings call by addressing the demand question and he said he wants to “put that concern to rest.”

He added, “Thus far in January, we’ve seen the strongest orders year-to-date than ever in our history. We currently are seeing orders at almost twice the rate of production. So, I mean that — it’s hard to say whether that will continue twice the rate of production, but the orders are high. And we’ve actually raised the Model Y price a little bit in response to that.”

Rivian is burning cash

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 around $16 billion. To put that in perspective, it had $13.8 billion as cash and cash equivalents on its balance sheet at the end of September.

The cash pile might have come down in Q4 as Rivian continues to burn cash. Previously, Rivian said that it has enough cash to fund its business until 2025.

It has meanwhile also been taking steps to lower the cash burn and has announced two rounds of layoffs over the last year. During the upcoming earnings call, analysts might question the company on whether it plans to lay off more employees.

Several funds exited Rivian stock

The Q4 2022 13F filings showed that David Einhorn of Greenlight Capital exited Rivian in Q4 while George Soros trimmed his positions. Barclays is meanwhile bullish on RIVN and sees it as a likely candidate to be the “next Tesla.”

Notably, Ford has also sold most of its stake in Rivian. It was the second largest RIVN stockholder after the IPO and held around a 12% stake. The company gradually sold the shares last year and now holds just over 1% of the EV company.