Rivian (RIVN) Q1 2022 earnings preview

Electric-vehicle maker Rivian Automotive will report its first-quarter earnings after market close on Wednesday. Wall Street analysts polled by Refinitiv expect a loss of $1.44 per share on revenue of about $130.5 million – but those numbers are likely to be just a small part of the story.

The bigger story is Rivian’s outlook for the next few quarters. Like most automakers, Rivian has been struggling with global supply chain disruptions that began during initial Covid-19 lockdowns and have been exacerbated since Russia invaded Ukraine in February. CEO RJ Scaringe warned investors in March that Rivian wouldn’t be able to produce as many vehicles in 2022 as it had originally planned, despite a swelling order book.

The electric truck maker may also face questions about whether its largest investors — Amazon and Ford Motor — are losing confidence. Rivian’s shares slid over 15% on Monday following a CNBC report that Ford sold 8 million of its total 102 million shares of the start-up.

Here are three themes that may come up in Rivian’s results, if reports last week from high-profile companies in the EV space — Fisker, Nikola, and Lucid Group — offer any guidance.

Fisker, Nikola and Lucid all reported strong order books when they released quarterly results last week.

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

Nikola said that it has received “purchase orders, letters of intent, and memoranda of understanding” for more than 500 of its battery-electric heavy trucks. That may not sound like much, but Nikola has a lot to prove after allegations that founder Trevor Milton misled investors. (Milton denies those allegations, but they nonetheless brought about his abrupt departure.) That number is also likely to grow as more fleets have a chance to evaluate Nikola’s battery-powered Tre semitruck, which has received strongly positive reviews from early customers, the company said.

As for Fisker, it now has over 40,000 reservations for its stylish Ocean SUV, set to launch late this year. In fact, 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 a planned 50,000 per year to as many as 150,000 per year by the end of 2023.

Back in March, Rivian said it had about 83,000 reservations for its R1T pickup and R1S SUV. Investors will be eager to see where that number stands on Wednesday.

Automakers of all sizes have been struggling with a global shortage of semiconductor chips since last year, a consequence of surging demand for personal computers and gaming devices during Covid lockdowns. More recently, the Russian invasion of Ukraine has led to shortages of certain components and a surge in prices for key commodities.

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

Nikola could probably sell quite a few more than 500 trucks this year based on demand, but it expects to build only 300 to 500 due to parts shortages. Although further expansions are underway, Nikola’s Arizona factory already has the capacity to build 2,500 trucks per year. The issue is that the company isn’t confident that it can secure enough chips – specifically, control units for its battery modules – CEO Mark Russell told investors on Thursday.

Rivian has likewise already slashed its production forecasts for 2022. It said in March that it expects to build 25,000 vehicles this year, down from the 50,000 it predicted in its IPO roadshow presentation last year. Wall Street will be looking for an update on production capacity when the company reports this week.

As Tesla investors know, raising cash isn’t difficult when a company’s stock price is high. But when the stock is under pressure, fundraising can be challenging.

With Rivian’s stock down roughly 90% from its high in 2020, the company has had to cut deals with private funds to raise cash on less-than-favorable terms. In its most recent deal, announced last week, a private investor agreed to buy $200 million worth of convertible notes – notes that will pay 8% interest if Nikola repays in cash, and 11% if it repays in stock.

Lucid still has plenty of cash from the deal that took it public, nearly $5.4 billion, Chief Financial Officer Sherry House said Thursday. But with big plans to expand its own Arizona factory, and a planned second factory in Saudi Arabia – a total of $2 billion in planned capital expenditures in 2022 – even relatively cash-rich Lucid may find itself in need of more funds before it can get to sustainable profitability. Unless its stock price surges, it may be hard to pull off a multibillion-dollar raise without diluting existing shareholders significantly.

Fisker said that it still has about $1 billion in cash, but much of that is earmarked for costs related to starting up production of its Ocean SUV. Its chief financial officer, Geeta Gupta-Fisker, said she expects Fisker’s operating expenses and capital expenditures to total between $715 million and $790 million this year.

At that rate, Fisker might need to raise $1 billion or more of additional capital as soon as the second quarter of next year – and like Lucid, its stock is well off its highs, which will make a big secondary offering a challenge.

Unlike its rivals, Rivian may not need to worry about cash any time soon. It had a hefty $18.4 billion on hand as of the end of 2021, and it said in March that it expects to burn about $8 billion through the end of 2023 as it works to ramp up production of the R1S, R1T and an electric delivery van for Amazon.

That cash advantage may be the edge Rivian needs to revive its stock price in an EV landscape facing production challenges.