Categories Analysis, Industrials

Rivian (RIVN) takes a tumble after a disappointing quarter and bleak outlook

As of March 8, Rivian has produced 1,410 vehicles in 2022

Shares of Rivian Automotive Inc. (NASDAQ: RIVN) were down 7% on Friday, following a disappointing Q4 2021 earnings report from the company a day ago. Revenues for the fourth quarter fell below estimates while adjusted loss per share was wider than expected. The production outlook for 2022 did not impress either and shares took a tumble. The stock has dropped 63% year-to-date and 35% over the past one month.

Quarterly results

Total revenues for the fourth quarter of 2021 stood at $54 million, which was below analysts’ projections. GAAP net loss for the quarter was $2.4 billion, or $4.83 per share, compared to a loss of $354 million, or $3.50 per share, in the year-ago period. On an adjusted basis, the company reported a net loss of $2.43 per share, which was wider than estimates, but lower than the year-ago number of $3.51 per share.

Rivian generated negative gross profit of $(383) million during the quarter. In its shareholder letter, the company stated that it will continue to experience negative gross profit related to significant labor and overhead costs as it produces vehicles at low volumes on production lines designed for higher volumes. Operating loss totaled $2.4 billion in the quarter.

Production

Rivian delivered 909 vehicles during the fourth quarter. The company will continue to invest significantly in its vehicle platforms and in-vehicle technologies over the coming months. The start to FY2022 has been a bumpy one as Rivian faced several headwinds during Q1 2022. These included a planned 10-day shutdown to make improvements to its production lines, supply chain constraints, a spike in COVID-19 cases, and severe winter weather. As of March 8, Rivian has produced 1,410 vehicles in 2022 and 2,425 vehicles since the start of production.

At the end of 2021, Rivian sold the first production electric delivery van (EDV) to Amazon (NASDAQ: AMZN). The line ramp for the EDV has been smoother compared to the other models but production has been restricted by supplier constraints. The company continues to work on resolving this issue.

Outlook

Over the course of FY2022, Rivian plans to focus on ramping up production of both the R1 and RCV lines at its Normal Factory. The company believes supply chain constraints will be a key issue determining its total output through the year. Rivian believes it can produce 50,000 vehicles across its R1 and RCV platforms in 2022 without supply chain constraints but with the current supply chain issues in front of it, the company believes it will be able to produce 25,000 vehicles for the year. The Street is not happy with this forecast.

Rivian continues to face supply chain challenges and inflationary pressures. The company is also working on boosting its manufacturing capabilities and minimizing price increases to customers. In this environment, it expects to recognize negative gross margins throughout this year. Adjusted EBITDA is estimated to be ($4.7) billion while Capex is expected to be $2.6 billion for 2022.  

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