Rivian Earnings Preview (RIVN) Q1 2022

Rivian CEO RJ Scarringe inside the company’s customer experience center outside its factory on April 11, 2022 in Normal, Ill.

Michael Wayland / CNBC

Electric vehicle manufacturer Rivian Automotive will report its first quarter earnings after the market close on Wednesday. Wall Street analysts interviewed by Refinitiv predict a loss of $ 1.44 per share on revenue of approximately $ 130.5 million, but these numbers are likely to be only a small part of the story.

The bigger story is Rivian’s outlook for the next few quarters. Like most carmakers, Rivian has struggled with global supply chain disruptions that began during the initial Covid-19 lockdowns and have been exacerbated since Russia invaded Ukraine in February. CEO RJ Scaring he warned investors in March that Rivian would not be able to produce all vehicles in 2022 as originally planned, despite a growing backlog.

The electric truck maker may also face questions about whether its biggest investors – Amazon Other Ford engine – they are losing confidence. Rivian’s shares fell more than 15% on Monday following a report from CNBC Ford sold 8 million of its 102 million total shares of the start-up.

Here are three themes that could emerge in Rivian’s results, if last week’s reports from high-profile companies in the electric vehicle industry – fisherman, NicolaAnd Glossy Group – offer guidance.

The demand for all types of electric vehicles is very strong

Fisker, Nikola and Lucid all got good orders when they released their quarterly results last week.

Lucido said it now has over 30,000 orders for its expensive Air sedan, from 25,000 last quarters – and that doesn’t include a recent order for up to 100,000 Lucids over the next 10 years from the Saudi Arabian government, said CEO Peter Rawlinson.

Nikola claimed to have received “purchase orders, letters of intent and memoranda of understanding” for more than 500 of its battery electric heavy trucks. It might not seem like a lot, but Nikola has a lot to prove next allegations that founder Trevor Milton misled investors. (Milton denies those allegations, but they still led to his abrupt departure.) That number is also likely to grow as more fleets get a chance to rate Nikola’s battery-powered Tre semi-trailer, which received strong positive reviews from early customers, the company said.

As for Fisker, he now has over 40,000 reservations for his sleek Ocean SUV, which is slated to launch later this year. In fact, the demand is so strong that CEO Henrik Fisker said he is working with the company’s manufacturing partner, Magna International, to increase production capacity from 50,000 planned annually to a whopping 150,000 annually by the end of 2023.

In March, Rivian said yes approximately 83,000 reservations for its R1T pickup and R1S SUV. Investors will be keen to see where that number stands on Wednesday.

Supply chain problems are still a big challenge

Carmakers of all sizes have struggled with a global shortage of semiconductor chips since last year, a consequence of the growing demand for personal computers and gaming devices during the Covid lockdown. More recently, the Russian invasion of Ukraine has led to a shortage of some components and a surge in the prices of key commodities.

Fisker won’t start production until mid-November, but both Lucid and Nikola have already had to redefine expectations for this year’s production totals. In February, Lucid reduced its full-year production drive from 20,000 vehicles to between 12,000 and 14,000. Chip shortages were a factor in that decision, Rawlinson said, but there was a shortage of more mundane materials like glass and carpet. Lucid reiterated this guidance in last week’s earnings report.

Nikola could likely sell a little over 500 trucks this year based on demand, but he plans to build only 300 to 500 due to shortages of parts. Although further expansions are underway, the Nikola plant in Arizona already has the capacity to build 2,500 trucks annually. The problem is that the company isn’t sure it can protect enough chips, especially the control units for its battery modules, CEO Mark Russell told investors on Thursday.

Likewise, Rivian has already slashed its production forecasts for 2022. In March it said it plans to build 25,000 vehicles this year, down from the 50,000 projected in last year’s IPO roadshow presentation. Wall Street will be looking for an update on production capacity when the company reports this week.

Collecting more money will be complicated

ace Tesla Investors know that raising money is not difficult when a company’s stock price is high. But when the stock is under pressure, fundraising can be challenging.

With Rivian’s shares down roughly 90% from its 2020 high, the company had to enter into deals with private funds to raise cash on unfavorable terms. In its most recent deal, announced last week, a private investor agreed to purchase convertible bills worth $ 200 million, bills that will pay 8% interest if Nikola pays back in cash and 11% if she pays back in cash. actions.

Lucid still has a ton of cash from the deal that made it public, nearly $ 5.4 billion, Chief Financial Officer Sherry House said Thursday. But with big plans to expand its factory in Arizona and a second planned factory in Saudi Arabia – totaling $ 2 billion in planned capital expenditures in 2022 – even relatively cash-rich Lucid may find itself in need of more funds sooner. to be able to achieve sustainable profitability. Unless its share price rises, it may be difficult to get a multibillion-dollar raise without significantly diluting existing shareholders.

Fisker said it still has around $ 1 billion in cash, but much of that goes towards the costs of starting production of its Ocean SUV. Its chief financial officer, Geeta Gupta-Fisker, said he expects Fisker’s operating expenses and capital expenditures to total between $ 715 million and $ 790 million this year.

At that rate, Fisker may need to raise $ 1 billion or more of additional capital as soon as the second quarter of next year and, like Lucid, its shares are well above its highs, which will make it a great secondary offering. a challenge.

Unlike its rivals, Rivian may not need to worry about cash anytime soon. He had a whopping $ 18.4 billion at the end of 2021 and in March he said he expects to burn about $ 8 billion until the end of 2023 as he works to increase production of R1S, R1T and an electric van for Amazon.

That cash edge could be the edge Rivian needs to boost its share price in an electric vehicle landscape facing manufacturing challenges.