Electric truck start-up
reported fourth-quarter results Thursday afternoon. Sales and the bottom line missed Street expectations.
That’s not as big a deal as guidance, which looks light, too. Rivian (ticker: RIVN) stock was tumbling in after-hours trading.
Rivian reported a loss of $4.83 a share on sales of $54 million. Wall Street had expected a loss of about $2 a share on sales of $64 million.
Sales and earnings, however, don’t matter all that much right now. Rivian just started shipping vehicles. Investors and analysts are more interested in the production ramp-up at the company’s plant in Illinois.
The company delivered 920 vehicles in the fourth quarter. Rivian reported about 83,000 preorders as of Tuesday, up from some 71,000 in December.
Rivian plans to ship about 25,000 vehicle the year, compared with Wall Street’s projection for about 40,000 vehicles.
The production ramp is simply moving slower than expected. Rivian has made 2,425 vehicles, again as of Tuesday, with 1,410 of those produced in 2022. Mizuho analyst Vijay Rakesh was projecting first-quarter deliveries of about 4,000 units. That estimate looks like a stretch now.
Management pinned the slow ramp on supply-chain issues. “We need to go speak to and push harder on [suppliers] to make sure they’re ramping as fast as the rest of our production line,” said CEO RJ Scaringe on the company’s conference call. “But ultimately our ability to ramp this year will continue to be gated by the supplier ramps.”
Rivian stock was down almost 13% in after-hours trading. The stock closed down about 6.4% in regular trading. Tea
Dow Jones Industrial Average
finished about 0.4% and 0.3% lower, respectively.
It was a tough day for many electric-vehicle producers.
(TSLA) shares dropped about 2.4%.
(NIO) American depositary receipts finished down almost 12%. Oil prices have fallen about 14% over the past two days, perhaps easing fears that gasoline prices would continue their march higher. High gas prices make EVs look more attractive at the margin, compared with traditional vehicles.
Investors should brace for stock volatility Friday. Options markets implied Rivian stock would move about 18%, up or down, following earnings.
Moves like that may be hard for investors to stomach, but the expectation for volatility after the Rivian earnings report probably won’t come as a surprise. Heading into Thursday, Rivan stock has moved more than 4%, up or down, in 11 of the past 13 trading sessions.
What’s more, as of the close of trading Thursday, Rivian stock is down almost 60% year to date, and is off almost 77% from a record high of almost $180 a share. Inflation, rising interest rates, and the Russian-Ukraine war have sapped some investor willingness to hold richly valued high-growth stocks.
Rivian qualifies as one of those. Shares trade for roughly 12 times estimated 2022 sales.
Rivian itself deserves some blame for recent stock declines, too. Early in March, shares dropped 13.5% after the company tried to raise prices for its vehicles for existing reservations. The company reversed its decision a day or two later.
Management said on their earnings conference call that the company did reservation cancellations after the pricing action. But after price increases were rolled back on existing reservations “we got massive reinstatement requests and more than half of our customers requested to reinstate,” added Scaringe.
Overall, it looks like a tough quarter for a company that is going through some initial growing pains.
Corrections & Amplifications:
Rivian shares trade at 12 times estimated sales. An earlier version of this article said it traded at 12 times estimated earnings.
Write to Al Root at email@example.com