Analysis

Rivian Stock Pops on Earnings Beat, Raised Production Outlook, and End of Amazon Van Exclusivity

Shares of Rivian Automotive (RIVN 1.40%) gained 4.4% in Tuesday’s after-hours trading, following the electric vehicle (EV) maker’s release of its third-quarter 2023 report.

Investors’ positive reaction is attributable to several factors: the quarter’s revenue and earnings exceeding Wall Street’s expectations, management raising its 2023 production target and improving its annual adjusted EBITDA loss guidance, and the company ending its exclusivity agreement with Amazon for the purchase of its commercial vans.

As background, Rivian makes two all-electric vehicles for consumers: the R1T (a pickup truck) and R1S (an SUV). It also produces an electric delivery vehicle, which until Tuesday’s announcement was only available to Amazon, which owns a sizable stake in Rivian.

Below is an overview of Rivian’s third quarter and outlook, centered around eight key metrics.

1. Revenue surged 149% year over year

In Q3, Rivian’s revenue was $1.34 billion, which surpassed the Wall Street consensus estimate of $1.31 billion. This result was up 149% from the year-ago period and up 19% from the prior quarter. Revenue was primarily generated from vehicles delivered in the quarter.

2. Produced 16,304 vehicles, up 17% from the second quarter

In the third quarter, Rivian produced a total of 16,304 vehicles, up 17% from the prior quarter. As with the second quarter, the majority of its R1 production during the quarter was R1S.

Also during Q3, the company delivered 15,564 vehicles, 23% higher than in the second quarter.

3. Continued rollout of Amazon’s 100,000 delivery vans

Rivian continues to fulfill Amazon’s initial order of 100,000 custom-designed electric delivery vans (EDVs). The company doesn’t disclose its production and delivery numbers for these vehicles. However, it did share that Amazon now has more than 10,000 EDVs in its fleet.

4. Operating loss narrowed 19%

Loss from operations was $1.44 billion, which is 19% narrower than the operating loss in the same period last year.

5. Adjusted loss-per-share narrowed 24%

The reported net loss was $1.37 billion, or $1.44 per share, a 23% improvement from the year-ago quarter.

Adjusted for one-time items, the net loss was $1.13 billion, or $1.19 per share, a 24% narrowing from the year-ago period. This result beat the adjusted loss of $1.33 per share that Wall Street had projected.

6. Cash used in operations narrowed 36%

In the third quarter, Rivian used $877 million in cash running its operations. This result is a 36% improvement from the cash used in the year-ago period, and also a 36% improvement from the second quarter.

Free cash flow was negative $1.07 billion. This is narrower than the negative $1.67 billion in the year-ago period, and also narrower than the negative $1.62 billion in the second quarter.

7. $9.13 billion in cash, cash equivalents, and short-term investments at quarter-end

Rivian ended the quarter with $9.13 billion in cash, cash equivalents, and short-term (liquid) investments, and $2.72 billion in long-term debt on its balance sheet.

At the company’s current cash-burn rate of $1.07 billion per quarter, its cash balance would last about 8.5 quarters, or just over two years. For an early stage pure-play EV maker, Rivian’s liquidity position is relatively solid.

8. Increased annual production guidance to 54,000 vehicles

Rivian raised its 2023 vehicle production forecast to 54,000 total units, up from 52,000. In 2022, it produced a total of 24,337 vehicles, so its 2023 production guidance represents an expected 122% annual increase.

The company also improved its 2023 outlook for adjusted EBITDA to negative-$4.0 billion, from negative-$4.2 billion.

In short, Rivian turned in a solid third-quarter report. Investors should be particularly pleased with the increase in the 2023 production outlook, the improvement in the annual adjusted EBITDA loss outlook, and the end of the commercial van exclusivity agreement with Amazon.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Beth McKenna has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.

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