March 30, 2023
RIVN stock was sharply up yesterday, over 10%, and more today.
What happened? Is it fundamental?
I have a very positive long-term view of Rivian for many reasons:
- The unique sectors they build EVs... Pickups, Full-size SUVs, and Commercial vans.
all of these are sectors that are not mass challenged by others, yet.
All are qualified for $7500 with a Maximum qualified price of $80k,
pending manufacturing and material Sourcing conditions in the
IRA incentive bill.
- The backing of Amazon, over 18% ownership, and a 100k Van order.
- The amount of Cash, is near $12B.
- The quality and performance of the products already delivered.
- Proven high demand and reservations (200k+),
exceeding 3-4 years of estimated production.
Although the company is facing a lot of challenges:
- Very high, unpredicted interest rates.
- Macroeconomy, inflation, and recession threats.
- Production ramp-up challenges.
- Extremely high negative gross profit margin
(-150% in Q4, compared to -170% for Lucid, +14% for Ford,
+13% for GM and +28% for Tesla), although improving every quarter.
- The IRA rebate might not qualify for a rebate until Rivian will source all
battery components from approved countries.
- Although some consider the Tesla Cybertruck as a farse, not a competitor,
It is going to begin Deliveries this summer and ramp up into mass production
next year. The Cybertruck has over 1.5m reservations and is expected
to be at lower prices than Rivian R1T, and will be qualified out of the gate
for the $7500 rebate for below $80k trims.
The deserving hype in the EV sector, since 2020 that no doubt was led by Tesla
crossing into profitability was over-amplified and spilled over,
undeservingly to other new and old companies.
RIVN was IPO'd at the end of 2021, at $78, and rushed quickly to above $170
and began a long crash along with other hyped companies
all the way down to All time low, below $13 a few days ago.
The last stock drop from around $19 in late February was due
to disappointing conservative guidance by Rivian management for 2023,
50k cars compared to an "expected" 60-65k.
Rivian produced over 10k cars (a 40k Annual production run rate)
in q4 but delivered only 8054 (a 32k annual delivery run rate).
The company ended the year with 24.3k cars produced,
but only 20.3k delivered (4k inventory).
Yesterday an Automobile research group, Cox Automotive,
stated that Rivian registrations for Q1 reached 8150 which
is said to be above the "Analyst expected" 7150".
Just a small example of how beating or disappointing made-up "analyst expectations" creates a short term mostly non-fundamental
catalyst or counter incentive.
I personally don't see 8150 registrations for Q1 (32.6k annual delivery run rate),
"a positive sign", I hope this report is wrong, given the 4k cars in inventory at the start of the quarter and the fact that $1.7B net losses per Q4 could only begin to decrease if production and delivery grow at high rates.
Another RIVN news yesterday was about Management offering employees
to move closer or quit, reducing remote working as a cost-saving move.
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