Written by Cláudio Afonso | info@claudio-afonso.com
Exane BNP Paribas analyst initiated coverage on Rivian Automotive shares with a price target of $35.00 and the Underperform rating. “Our ’23E-’24E revenue is 9-13% below consensus, while adjusted EBITDA runs just ~1 % lower amid negative per unit economics”, said the analyst. Earlier today, Rivian shares were trading as much as 7.00% higher near $42.00 per share.
“Rivian’s original launch volume trajectory would have been the steepest 6-yr. ascent of any OEM producing EVs, 2nd only to Tesla’s Model 3 ramp. But instead of one model at one plant, Rivian intends making 3 models (one Amazon’s) as well as seamlessly construct, equip & produce out of a new factory. Our concerns stem from the DNA in expectations tied to its original ramp vision of not just a company with visionary brand, aesthetics & quad-motor strengths, but of superman-like production prowess.” — the analyst said.
“First wave of kryptonite: pricing & logistics; Initiating Underperform with $35 price target We think RIVN has a serious brand w/true staying power, but now needs to achieve a balance of power internally w/folks offering real, hard-fought automotive mileage from their resumes – Frank Klein from Steyr is a fantastic first move. The magnitude of RIVN’s latest +19% (l-f-I options) price increase suggests its original R1T/R1S pricing was structurally unprofitable, which a departed employee illuminated back in Apr./May 2021, along w/concerns over launch manufacturing & logistical readiness – before supply chains took on additional disruptive & inflationary pressures.”
Pricing snafu in perspective With RIVN’s +19% price increase now only taking effect for reservations placed after March 1 5 instead of immediately across all pre-order deposits, we now know the company stands to deliver upwards of 80K units (based on ~83K reservation tally as of 3/8/22) at a price point ~20% below what it recently assessed acceptable. Given guided throughput this yr. and our R1 builds for 2023, it likely takes Rivian through 24 to deliver entire legacy reservation slate. Our ’23E-’24E revenue is 9-13% below consensus, while adjusted EBITDA runs just ~1 % lower amid negative per unit economics. ” — analyst concluded.
The EV maker announced on April 5 that produced a total of 2,553 vehicles in Q1 2022 at its manufacturing facility in Normal, Illinois. The company delivered 1,227 vehicles during the same period being in line with the company’s expectations for the year. Rivian believes it is “well positioned to deliver on the 25,000 annual production guidance provided during its Q4 earnings call on March 10, 2022”. The company recently reported Q4 and Full Year 2021 Earnings where it lowered its production guidance for 2022 and expects now to deliver 25,000 vehicles (down from 40,000).
Recently, RBC analyst Joseph Spak released a client note on Rivian where he expects a stronger Q1 2022 deliveries than the consensus. At the time, the analyst expected the company to reach a weekly production of 320 units in Q1 2022, which means 2,370 vehicles produced during the quarter.
“We note that Visible Alpha consensus 1Q22 deliveries is 1.5k (but based on only 7 inputs). We forecast 1Q22 production is closer to the 2.4k level but assume that ~1 week of production is in transit,” Spak added.
As of March 8, Rivian had 83,000 R1 net preorders in the U.S. and Canada and 100,000 EDV units reserved from Amazon and counts 11,500+ employees. The company has been facing a number of challenges, from production ramp-up to orders cancelled after increasing its prices by 17% and 20%. Rivian announced that has raised the price of its R1T pickup by 17% and R1S SUV by about 20%. Increases in the cost of raw materials, inflationary pressure and the already known chip shortage issue are the reasons for this price increase.
Written by Cláudio Afonso | info@claudio-afonso.com