Rivian (RIVN) Q1 2022 earnings preview

Rivian CEO RJ Scaringe inside the firm’s shopper working experience center outside the house of its plant on Aptil 11, 2022 in Ordinary, Sick.

Michael Wayland / CNBC

Electrical-car maker Rivian Automotive will report its initially-quarter earnings immediately after current market shut on Wednesday. Wall Street analysts polled by Refinitiv assume a loss of $1.44 per share on earnings of about $130.5 million – but these quantities are likely to be just a small section of the story.

The more substantial tale is Rivian’s outlook for the next couple quarters. Like most automakers, Rivian has been having difficulties with world wide supply chain disruptions that began for the duration of first Covid-19 lockdowns and have been exacerbated because Russia invaded Ukraine in February. CEO RJ Scaringe warned investors in March that Rivian would not be able to create as many cars in 2022 as it experienced at first planned, irrespective of a inflammation purchase e-book.

The electric truck maker may possibly also face concerns about whether or not its premier traders – Amazon and Ford Motor – are shedding self esteem. Rivian’s shares slid more than 15% on Monday adhering to a CNBC report that Ford bought 8 million of its whole 102 million shares of the start off-up.

Below are three themes that may possibly appear up in Rivian’s results, if experiences final week from substantial-profile providers in the EV space — Fisker, Nikola, and Lucid Team — provide any advice.

Desire for all sorts of EVs is quite potent

Fisker, Nikola and Lucid all documented potent get books when they released quarterly outcomes last 7 days.

Lucid explained it now has around 30,000 orders for its dear Air sedan, up from 25,000 past quarter – and that doesn’t consist of a the latest buy for up to 100,000 Lucids in excess of the next 10 many years from the authorities of Saudi Arabia, CEO Peter Rawlinson stated.

Nikola explained that it has been given “purchase orders, letters of intent, and memoranda of comprehension” for far more than 500 of its battery-electrical significant vans. That may well not audio like considerably, but Nikola has a ton to show right after allegations that founder Trevor Milton misled traders. (Milton denies those allegations, but they even so introduced about his abrupt departure.) That variety is also most likely to grow as more fleets have a likelihood to evaluate Nikola’s battery-driven Tre semitruck, which has gained strongly good evaluations from early prospects, the corporation reported.

As for Fisker, it now has around 40,000 reservations for its classy Ocean SUV, established to start late this calendar year. In reality, desire is so sturdy that CEO Henrik Fisker said he is functioning with the company’s producing husband or wife, Magna Intercontinental, to maximize manufacturing potential from a prepared 50,000 for every yr to as lots of as 150,000 for each 12 months by the close of 2023.

Again in March, Rivian said it experienced about 83,000 reservations for its R1T pickup and R1S SUV. Investors will be keen to see where by that selection stands on Wednesday.

Offer chain concerns are still a massive challenge

Automakers of all sizes have been battling with a world-wide shortage of semiconductor chips due to the fact last yr, a consequence of surging demand from customers for particular pcs and gaming gadgets for the duration of Covid lockdowns. A lot more recently, the Russian invasion of Ukraine has led to shortages of particular elements and a surge in rates for essential commodities.

Fisker is not going to start out creation until mid-November, but both Lucid and Nikola have now had to reset anticipations for this year’s production totals. In February, Lucid reduce its total-12 months creation steerage from 20,000 motor vehicles to in between 12,000 and 14,000. The chip scarcity was a component in that decision, Rawlinson stated, but so had been shortages of far more mundane elements like glass and carpet. Lucid reiterated that advice in previous week’s earnings report.

Nikola could probably promote pretty a number of far more than 500 vans this yr primarily based on demand, but it expects to build only 300 to 500 because of to components shortages. Despite the fact that further expansions are underway, Nikola’s Arizona manufacturing unit now has the potential to build 2,500 vehicles for every 12 months. The difficulty is that the organization isn’t really confident that it can safe plenty of chips – especially, manage models for its battery modules – CEO Mark Russell advised buyers on Thursday.

Rivian has likewise now slashed its generation forecasts for 2022. It reported in March that it expects to make 25,000 autos this 12 months, down from the 50,000 it predicted in its IPO roadshow presentation previous 12 months. Wall Road will be looking for an update on manufacturing capability when the company experiences this 7 days.

Increasing far more income will be complex

As Tesla investors know, elevating cash isn’t tough when a firm’s inventory value is substantial. But when the inventory is beneath stress, fundraising can be hard.

With Rivian’s inventory down about 90% from its higher in 2020, the business has experienced to lower discounts with private money to raise hard cash on significantly less-than-favorable phrases. In its most recent deal, announced very last 7 days, a personal investor agreed to purchase $200 million well worth of convertible notes – notes that will pay back 8% interest if Nikola repays in dollars, and 11% if it repays in inventory.

Lucid nonetheless has loads of hard cash from the offer that took it community, almost $5.4 billion, Chief Fiscal Officer Sherry Property claimed Thursday. But with major designs to grow its have Arizona manufacturing facility, and a prepared second factory in Saudi Arabia – a total of $2 billion in prepared cash expenditures in 2022 – even rather dollars-abundant Lucid could uncover by itself in need of more funds before it can get to sustainable profitability. Except its inventory cost surges, it may possibly be hard to pull off a multibillion-greenback increase devoid of diluting present shareholders considerably.

Fisker said that it even now has about $1 billion in income, but considerably of that is earmarked for charges linked to beginning up production of its Ocean SUV. Its chief monetary officer, Geeta Gupta-Fisker, explained she expects Fisker’s operating bills and capital expenses to total concerning $715 million and $790 million this year.

At that fee, Fisker may well need to have to elevate $1 billion or far more of further capital as quickly as the next quarter of subsequent yr – and like Lucid, its inventory is effectively off its highs, which will make a significant secondary supplying a problem.

Unlike its rivals, Rivian could not have to have to fret about cash any time shortly. It experienced a significant $18.4 billion on hand as of the conclusion of 2021, and it explained in March that it expects to melt away about $8 billion through the conclude of 2023 as it performs to ramp up production of the R1S, R1T and an electric delivery van for Amazon.

That cash gain may perhaps be the edge Rivian wants to revive its stock price in an EV landscape experiencing manufacturing challenges.