Rivian Q3 preview: Where next for Rivian stock?

When will Rivian release Q3 results?

Rivian is scheduled to release third quarter earnings after US markets close on Thursday December 16.

Rivian Q3 earnings preview: what to expect from the results

This will be the first set of earnings to be released by Rivian since it completed its blockbuster IPO in November.

The latest figures out show Rivian had only produced 180 of its R1Ts pickup truck by the end of October, with 156 of them being shipped to customers, nearly all of which were Rivian employees. It has said it is aiming to produce 1,200 R1Ts by the end of 2021 and deliver 1,000 of them to customers. It has also started to deliver its new R1S sports utility vehicle this month and it is aiming to produce 25 of them and deliver 15 before the year is out.

These are small numbers, but it is important Rivian sets the tone for what investors can expect over future quarters by demonstrating it can deliver on its promises, especially as the entire industry battles against supply chain disruption and the global chip shortage. It has over 48,000 pre-orders on its books, so for now the challenge is not drumming-up demand but ramping-up supply.

The first deliveries were made in the last few weeks of the third quarter and only 11 were shipped before the end of September. With this in mind, the financial results will not be the top priority for investors this week. Analysts have pencilled in revenue of just under $1 million and a net loss of $1.22 billion. Instead, the focus will be on the progress made in the fourth quarter and the outlook heading into 2022. Investors will also be keeping an eye out on the level of cash burn, with cash and equivalents set to come in around $5.1 billion at the end of September.

Production should start to ramp-up significantly in 2022. Its existing manufacturing plant in Illinois can produce up to 150,000 vehicles each year and this should rise to 200,000 by 2023. Plus, Rivian has said it is exploring locations for new factories and Bloomberg reported over the weekend that the company could announce plans to construct a new vehicle assembly and battery manufacturing plant in Georgia when it releases results this week.

We should also initial progress be made with Rivian’s Electric Delivery Vehicle (EDV) next year. The company has designed it with input from its largest shareholder, which happens to be Amazon. The ecommerce giant has ordered 100,000 EDVs and Rivian is striving to deliver all of them by the end of 2025, with the first 10,000 to be shipped in 2022. The huge order means Amazon is likely to swallow up capacity for some time but Rivian hopes to build commercial vehicles for other businesses going forward.

Amazon owns around 20% of Rivian and sits alongside Ford, which owns around 12%. While Amazon sees Rivian as a way of modernising and cleaning-up its fleet of vehicles (and possibly as a springboard to enter the EV space in the future), Ford has a different view. Plans for the two automakers to work together have recently been scrapped and they are not sharing technology, and that makes them rivals considering Ford will be unleashing the F-150 electric pickup truck next year. But that doesn’t mean Ford won’t wield its sizeable stake in the future.

Where next for Rivian stock?

Rivian only went public last month through an IPO priced at $78 per share, giving it an initial valuation of $66.5 billion.

Although the stock still trades significantly higher than its IPO price, with the stock currently trading at $114.50, it has lost considerable ground since hitting a high of $179.50 on November 16, when it boasted a market cap as large as $153 billion, as the initial hype around the hottest EV listing of 2021 settles down.

Still, Rivian is the fifth most-valuable automaker in the world at present – bigger than its shareholder Ford and other traditional automakers including General Motors, Daimler and BMW. Virtually all of that value is being assigned to Rivian’s growth prospects considering it only recently started shipping vehicles to customers and it is likely to remain volatile as it aims to keep up with expectations in what will be a crucial year for the company.

Tesla’s stock became highly sensitive to quarterly deliveries and results when it was in growth mode and racing to become sustainable and profitable, and markets can expect a similar trend for Rivian as it joins the race in the electric vehicle market. The key influence on Rivian stock over the next year and beyond will be the rate of growth it can deliver.

Brokers agree with the markets and are extremely bullish on Rivian. The seven that have initiated coverage have a Buy rating on the stock and an average target price of $134.60, implying over 15% potential upside from the current share price.

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