Can Rivian Stock Price Stage a Comeback In Q4 of 2022?
October 04 2022 - 6:23AM
Finscreener.org
Backed by
Amazon (NASDAQ:
AMZN) and
Ford (NYSE:
F), Rivian
Automotive (NASDAQ:
RIVN) had a blockbuster
IPO in late 2021. At its peak, the stock was valued at more than
$120 billion, and it is now trading 81% from all-time
highs.
In Q3 of 2022, Rivian Automotive
produced over 7,000 vehicles, which is a quarterly record for the
company. Rivian also confirmed it remains on track to produce
25,000 vehicles in 2022.
Last year, the electric vehicle
manufacturer forecasted to manufacture 50,000 vehicles in 2022. But
supply chain disruptions and rising commodity prices led to
Rivian’s lower forecast, driving share prices
lower.
Amazon has a 22% stake in Rivian
and is expected to order 100,000 delivery vans from the EV
manufacturer through 2030. Comparatively, global EV sales might
surpass 31 million units by 2030, up from 4.3 million units in
2021, providing enough room to increase top-line growth in the
future.
Is Rivian stock a buy?
Rivian confirmed its order
backlog remains strong. It ended the June quarter with a preorder
backlog of 98,000 units for its R1 vehicle in North America. Its
average daily preorder rate gained pace in Q2 of 2022, reflecting
the broader appeal of the R1 platform. Around 60% of R1T preorder
holders have never owned a pickup truck, while 90% of preorder
holders do not own an electric vehicle.
Rivian is also investing heavily
to expand its ecosystem and launched charging sites that are
deployed at state and national parks. It aims to open 3,500 fast
chargers at 600 sites along major highways in the United States and
Canada. This vertical integration should allow Rivian to improve
the user experience and achieve cost efficiencies.
Rivian generated
$364 million in sales in Q2 and is
on track to end the year with $1.84 billion in revenue. Further,
analysts expect the top line to surge to $6.36 billion in 2023.
Will these impressive growth rates inspire investor confidence and
push RIVN stock prices higher in Q4 of 2022?
RIVN stock will remain volatile in the near
term
While Rivian continues to grow at
a rapid pace, it remains unprofitable. In the June quarter, it
reported a negative gross profit of $704 million and is forecast to
end the year with an adjusted loss of $6.9 per share.
Rivian explained, “As we produce
vehicles at low volumes on production lines designed for higher
volumes, we have and will continue to experience negative gross
profit related to labor and overhead costs. This dynamic will
continue in the near term, but as we have already started to
experience, we expect it will improve on a per vehicle basis as
production volumes ramp up faster than future labor and overhead
cost increases.”
Rivian reported a net loss of
$1.71 billion in Q2, compared to a net loss of $580 million in the
year-ago period. The wider losses were due to higher operating
expenses as the company continued to ramp up production at a fast
clip.
Manufacturing EVs is a
capital-intensive process, and Rivian may very well report losses
for several years. But it ended Q2 with a cash balance of $15
billion, providing it with enough financial flexibility to focus on
growth and support a high cash burn rate.
Tesla (NASDAQ: TSLA)
remains the
undisputed leader in the EV
segment but might
continue to lose market share to new and established players such
as Rivian, Ford, and General Motors
(NYSE:
GM).
Analysts remain bullish on the
company, and RIVN stock price is trading at a discount of 50%
compared to average analyst estimates right now.
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