After the market close on May 11, Rivian Automotive, Inc. (NASDAQ: RIVN) reported 1Q 2022 earnings, which, as expected, included a modest amount of vehicle production and an enormous degree of cash burn — $1.45 billion of combined negative operating cash flow and capital expenditures.
The biggest positives in Rivian’s release were re-affirmations that it will produce 25,000 vehicles in 2022 and that its 2022 adjusted EBITDA loss is not projected to widen from US$4.75 billion. Rivian introduced both figures in early March 2022 when it reported full-year 2021 earnings. Some analysts feared that supply chain difficulties, particularly for semiconductors, could prompt Rivian to negatively adjust those estimates.
| (in millions of U.S. dollars) | Full Year 2022E | 2Q 2022E | 1Q 2022 | 4Q 2021 | 3Q 2021 |
| Revenue | $95 | $54 | $1 | ||
| Operating Income | ($1,579) | ($2,454) | ($776) | ||
| Operating Cash Flow | ($1,034) | ($1,086) | ($685) | ||
| Adjusted EBITDA | ($4,750) | ($1,144) | ($1,108) | ($727) | |
| Capital Expenditures | ($2,600) | ($418) | ($455) | ($469) | |
| Cash – Period End | $16,432 | $18,133 | $5,156 | ||
| Debt and Convertible Preferred – Period End | $1,609 | $1,533 | $11,085 | ||
| Number of Vehicles Produced (A,B) | 25,000 | 1,432 | 2,553 | 1,003 | 12 |
| Number of Vehicles Delivered | 1,227 | 909 | 11 |
Having said that, the actual production figures which Rivian reported do not inspire complete confidence that it will make its 25,000-unit forecast for 2022. The company said that as of May 9, 2022, it has produced about 5,000 vehicles since it commenced production. After factoring in the number of vehicles manufactured in 2H 2021 and 1Q 2022, this implies around 1,432 vehicles were produced over the first 39 days of 2Q 2022, equivalent to average weekly production of just 257 cars. To meet its 25,000 unit goal for this year, Rivian will need to produce nearly 600 vehicles per week from May 10, 2022 through December 31, 2022.
Rivian continues to boast a fortress balance sheet: US$16.4 billion of cash against only $1.6 billion of debt. However, its March 31, 2022 cash balance declined US$1.7 billion from US$18.1 billion as of December 31, 2021. This, combined with its enormous cash burn projections for the remainder of 2022, could mean that Rivian will raise additional equity before the end of the year.
As of May 9, reservations for Rivian’s R1T pickup trucks and R1S SUVs exceeded a combined 90,000 in the U.S. and Canada, up from around 83,000 as of March 8 and 71,000 in mid-December.
| As of 5-9-22 | As of 3-8-22 | As of 12-15-21 | As of 10-31-21 | As of 9-30-21 | |
| R1T Pickup Trucks: | |||||
| Produced | 650 | 180 | 12 | ||
| Delivered | 384 | 156 | 11 | ||
| R1S SUVs: | |||||
| Produced | 2 | 0 | |||
| Delivered | 2 | 0 | |||
| Total Vehicles Produced Since Inception | 5,000 | 2,425 | 652 | ||
| R1T and R1S Combined Reservations | 90,000 | 83,000 | 71,000 | 55,400 | 48,000 |
Ford Motor Company (NYSE: F) sold 8 million of its 102 million Rivian shares on May 9, the date the 180-day insider lock-up period ended following Rivian’s November 2021 IPO. Ford realized about US$214 million from the sale. Amazon.com, Inc. (NASDAQ: AMZN), Rivian’s other major corporate backer, has not yet disclosed any sales of its Rivian holdings. Amazon owns about 160 million Rivian shares, equivalent to about an 18% stake.
Rivian is a difficult-to-value stock. The shares are down about 90% from its November 2021 high, and after factoring in its US$14.8 billion net cash position, Rivian’s enterprise value is “only” US$3.4 billion. However, when compared against its projected 2022 adjusted EBITDA of negative US$4.75 billion, the valuation judgment is difficult.
Rivian does appear reasonably valued versus Lucid Group, Inc. (NASDAQ: LCID),another high-profile, well-capitalized start-up electric vehicle (EV) manufacturer. Lucid produces high-end EV sedans. Both companies are currently realizing substantial start-up losses and are at least several years from profitability, yet Lucid’s approximate US$20 billion enterprise value is about six times Rivian’s.
Rivian Automotive, Inc. last traded at US$24.91 on the NASDAQ.
Information for this briefing was found via Edgar and the companies mentioned. The author has no securities or affiliations related to this organization. Views expressed within are solely that of the author. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
