What happened
After plunging to all-time lows yesterday, Rivian Automotive (RIVN +2.01%) stock made a solid comeback this morning and is shooting to the moon. As of 11 a.m. ET Thursday, Rivian shares were jumping as high as 26%.
The electric vehicle (EV) manufacturer that's been hitting the headlines for all the wrong reasons lately released its first-quarter numbers after market close Wednesday, and it dispelled investors' biggest fear.
So what
A company that misses earnings estimates usually sees its stock drop hard after earnings are announced. Rivian generated $95 million in revenue in the first quarter versus analysts' estimates of roughly $130.5 million. The EV stock still surged. Here are four reasons why.
First, Rivian's adjusted loss of $1.43 per share was pretty much in line with estimates. Its net loss, though, ballooned to nearly $1.6 billion versus a loss of $414 million in Q1 2021 on significantly higher labor and input costs, as well as higher operating costs spent on scaling up production.
Second, Rivian produced a total of 2,553 vehicles and delivered 1,227 vehicles in Q1. That confirmed Rivian has been able to ramp up production in recent months given that it produced 1,015 vehicles and delivered 920 units in full year 2021.
Image source: Rivian Automotive.
Third, Rivian said it had received more than 10,000 orders across its R1T pickup truck and R1S SUV with an average price of $93,000 per unit since it increased prices in early March. Rivian faced public backlash at that time when it increased prices, with many customers who prebooked vehicles even canceling orders, as per posts on social media. Rivian eventually decided not to raise prices on vehicles booked before March 1, but many feared the move to abruptly increase prices by a big margin could hit Rivian's order flow.
There's one number worth noting here: Rivian said it had over 90,000 "net preorders" across R1T and R1S as of May 9, compared with 83,000 net preorders as of March 8. That gives a hint of some cancellations in between.
Fourth, and most importantly, many wondered whether Rivian would be able to meet its previous production guidance of 25,000 vehicles this year given how input costs have surged in recent weeks even as key raw materials like semiconductor chips remain in short supply.
Rivian just said that although supply chain constraints will limit production, it is confident it will manufacture 25,000 vehicles this year. It also reiterated something it said earlier in March: Its plants are capable of producing twice as many vehicles this year if not for supply constraints. Rivian expects to incur an adjusted loss of $4.7 billion before interest, tax, depreciation, and amortization in 2022.
Now what
Aside from core numbers, Rivian also gave investors insight into a recent development it hadn't said much about yet: its plans in Georgia, a state that recently rewarded Rivian with incentives worth $1.5 billion to build a plant.
Rivian now says the $17 billion in cash it held as of March 31 will be sufficient to cover its expenses through the launch of an affordable midsize SUV, the R2 manufactured at the new plant in Georgia in 2025.
On its Q1 earnings conference call, Rivian elaborated two things giving management confidence in achieving that 2025 goal with existing cash: expectations of turning profitable once it can produce at current full capacity of 150,000 units as supply woes end, and plans to build the Georgia plant in phases to spread out capital expenditures.
NASDAQ: RIVN
Key Data Points
Analysts continue to cut their price targets on Rivian stock, with several slashing theirs this morning, but investors who've watched the stock plunge to all-time lows yesterday see a silver lining in the EV maker's latest earnings report.
