EV start-up Rivian reports results Thursday after the bell. Here’s what investors should know

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A Rivian electric truck is displayed near the Nasdaq MarketSite building in Times Square on November 10, 2021 in New York City.

Michael M. Santiago | Getty Images

Wall Street analysts have set a high bar for EV start-up Rivian Automotive following its blockbuster IPO last month, comparing CEO RJ Scaringe to Superman and saying the company’s “the one” capable of challenging Tesla.

Whether Rivian and Scaringe, who does resemble Clark Kent, can live up to the hype will begin Thursday after the markets close when the automaker reports its first quarterly financial results as a public company.

While Rivian has given some earnings and production guidance as part of its IPO, investors will concentrate on any updates or changes to its plans. Specifically, vehicle production, consumer deliveries and pre-orders of its first electric vehicles.

The company’s revenue and financial results are less relevant at this point, as it attempts to ramp-up production of three products simultaneously at its plant in Normal, Ill. Its first EVs are the R1T pickup and R1S SUV for consumers and a commercial delivery van for Amazon.

Overall, Wall Street analysts are cautioning investors to expect some growing pains for Rivian, but they predict the company will successfully navigate such challenges and establish itself as a worthy competitor against Tesla and others in the EV industry.

“Auto investors who missed Tesla have struggled to make the case for legacy OEMs and a raft of de-SPAC EV start-ups over the past 12 months,” Morgan Stanley’s Adam Jonas wrote in an investor note last week initiating Rivian at overweight with a $147 a share price target. “While risks remain, we believe Rivian has all the key attributes to be ‘the one’ that won’t get away from your EV portfolio.”

Morgan Stanley’s price target is in line with the overweight rating and target price of $134.08 a share based on 15 analysts compiled by FactSet.

Here’s more on the Rivian’s plans and what investors should know ahead of its third-quarter results Thursday after the bell.

Expect losses

RJ Scaringe and team on opening day at Rivian’s manufacturing campus in Normal, IL.

Source: Rivian

For the third quarter, Rivian last month estimated operational losses of between $745 million and $795 million and a net loss of between $1.21 billion and $1.28 billion. It forecasted its quarterly revenue to be about $1 million.

Murphy, in an investor note last week, said the company’s “near-term business success will be measured by orders and production trends” rather than financials.

Pre-orders

Wall Street is particularly concentrating on Rivian’s reservation numbers as a barometer of demand.

Rivian disclosed to investors last month that it has a backlog of pre-orders for 55,400 R1T and R1S vehicles from customers in North America and plans to deliver these by the end of 2023.

Aside from its consumer pre-orders, any increase or pull ahead of Rivian’s plans to deliver commercial vans to Amazon could be positive for the company’s stock.

Production

Rivian’s plan to launch and ramp-up production of three vehicles simultaneously would be daunting for an established automaker, let alone a start-up. That’s where Superman comes in.

“Rivian needs to ramp quickly and effectively to materialize as a serious long-term contender. That is, Clark Kent (R.J. Scaringe) needs to emerge from the phone booth as Superman soon to scale Rivian and save the plane,” Baird Equity Research analyst George Gianarikas told investors in a note.

Rivian has said it expects to deliver about 1,000 R1Ts, 15 R1S SUVs and 10 delivery vans to Amazon in 2021.

The new all-electric pickup truck by Rivian, the R1T, sits at one of its facilities on November 09, 2021 in the Brooklyn borough of New York City.

Spencer Platt | Getty Images

Analysts said investors shouldn’t expect a perfect production ramp-up curve, but one that’s slow and steady for the time being with some bumps along the way.

RBC Capital Markets’ Joseph Spak said that “while there will undoubtedly be some hiccups along the way,” he predicted Rivian will hit its production targets, growing at a compound annual rate of 52% by 2030.

“This trial by fire approach can help forge Rivian’s DNA setting it up for future success,” he said in an investor note.

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