Latest Earnings, Stocks and Business News for May 11, 20224 min read
Shares of Rivian, the electric-vehicle maker that went public last year with big ambitions to take on Tesla and others, jumped Thursday after the company reaffirmed its production forecast for this year despite supply-chain problems.
In midday trading, the shares were up more than 20 percent.
Before Thursday’s session, the company’s stock price had declined over 80 percent this year as investors grew nervous about its prospects.
But after the close of trading Wednesday, Rivian issued first-quarter financial results that largely met forecasts and said it foresaw making 25,000 vehicles this year, affirming a forecast the company made in March.
Rivian detailed persistent problems in obtaining semiconductors and other parts. Since the end of March, the company said, the shortages have forced it “to stop production for longer periods than anticipated, resulting in approximately a quarter of the planned production time being lost due to supplier constraints.”
The output so far totals 5,000. “We have done all this in one of the most challenging operating environments in decades,” R.J. Scaringe, Rivian’s chief executive, said on a call with analysts on Wednesday.
All car companies are facing supply-chain constraints, but smaller ones like Rivian that lack long-term relationships with suppliers may find it harder to cope. The difficulties pose more of a risk to newer carmakers, which may have trouble gaining a significant share of the electric-vehicle market before more established companies introduce scores of products in the coming years.
Given such obstacles, investors will be watching for any signs that Rivian might fall short of its 2022 production target. “It’s still achievable, but it could be a stretch,” said Garrett Nelson, an analyst at the research firm CFRA who covers Rivian. He added that the plunge in Rivian’s stock market value could make it a takeover target for a company that wanted to get into the electric-vehicle market.
Rivian reported a net loss of $1.6 billion in the first quarter on sales of just $95 million. In the first quarter of last year, Rivian had no sales and a loss of $414 million. The company is reporting large losses because it is spending huge sums to scale up production of its three vehicles: a truck designed primarily for leisure pursuits, a sport utility vehicle and a delivery van for Amazon, an early investor in Rivian and a major shareholder.
The company said it had more than 90,000 orders for its truck and its S.U.V., compared with around 83,000 in March.
Amazon has ordered 100,000 delivery vans, but Rivian has been reluctant to say how many it has shipped. On Wednesday, it said only that it was “ramping production and deliveries.” On the call with analysts, Mr. Scaringe said he expected the vans to make up roughly a third of the 25,000 vehicles in the 2022 production forecast.
In many ways, Rivian epitomizes the sharp shift to bearishness in the stock market this year.
In November, investors piled into its initial public offering, in which the company raised $13.5 billion, and its shares then soared, briefly giving Rivian a stock market value that was nearly as large as those of Ford Motor and General Motors combined.
But the stock plunged this year after the company cut its production targets. The 80 percent decline in Rivian’s shares is far steeper than a 31 percent drop in Tesla’s stock over the same period and a 38 percent drop for Ford, which is introducing its own electric truck.
Rivian makes vehicles in Normal, Ill., and plans another factory in Georgia. Building and running assembly lines requires enormous amounts of cash, which is why new car companies can run into dire financial straits if production lags and sales fall short. Even Tesla, which sells more electric cars than any other company, sometimes found itself running low on funds.
In the first quarter, Rivian used up $1.45 billion in cash running its business and investing in new facilities and equipment, much more than the $800 million it consumed in the first quarter of 2021. The company had $16.4 billion in cash on its balance sheet at the end of the first quarter, down from $18.1 billion at the end of last year.
The decline in Rivian stock slashed the value of the stakes held by its largest shareholders. Amazon’s 18 percent stake is worth $3.2 billion, down from $16.8 billion at the start of the year. Ford, another early investor, sold some of its shares on Monday, and its remaining stake is worth $1.9 billion. It would have been worth $9.7 billion at the end of last year.
Rivian said it took more than 10,000 orders for its truck and its S.U.V. after it raised prices in March. Those orders had an average price of over $93,000, the company added.
But because Rivian’s vehicles sell for relatively high prices, analysts wondered how much demand there might be if inflation continued to eat away at households’ spending power. “It remains to be seen how much appetite consumers have for a price tag of a Rivian,” Mr. Nelson said.