The American electric-vehicle maker Rivian will report its Q4 and full-year 2021 results after Market’s closing, on Thursday. The company has been facing a number of challenges, from production ramp-up to orders cancelled after increasing its prices by 17% and 20%. After hitting a new All-Time-Low a couple minutes after the opening bell on March 8th (at $39.86), Rivian share price rose by 4.12% on Wednesday amid Market bounce with the lower price seen on the commodities. The S&P 500 and Dow Jones Industrial Average rose 2.6% and 2%, respectively, while Nasdaq popped 3.60%. Currently, Rivian shares are down around 56% Year-to-date.
Last week, 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.
“The Rivian R1T’s price is increasing 17% which will increase the base cost from $67,500 to approx $78,975. The R1S will see a whopping 20% price increase, bringing the new base price from $70k to about $84k. Like most manufacturers, Rivian is being confronted with inflationary pressure, increasing component costs, and unprecedented supply chain shortages and delays for parts (including semiconductor chips).”
On March 3rd, the company sent an e-mail to all reservation holders reversing the decision saying that the “original configured price will be honored” .
“Earlier this week, we announced pricing increases that broke the trust we have worked to build with you. Since originally setting our pricing structure, and most especially in recent months, a lot has changed. The costs of the components and materials that go into building our vehicles have risen considerably. Everything from semiconductors to sheet metal to seats has become more expensive and with this we have seen average new vehicle pricing across the U.S. rise more than 30% since 2018. Given our build lead up times, we need to plan production costs not only for today, but also for the future. As we worked to update pricing to reflect these cost increases, we wrongly decided to make these changes apply to all future deliveries, including pre-existing configured preorders. We failed to appreciate how you viewed your configuration as price locked, and we wrongly assumed the announced Dual-Motor and Standard battery pack would provide configurations that would deliver price points similar to your original configuration. While this was the logic, it was wrong and we broke your trust in Rivian. We also didn’t manage communications well. We didn’t give you enough insight into what was driving these decisions.”
EARNINGS EXPECTATIONS
Rivian will present its Q4 and Full Year Results today after the closing bell and will host a conference call at 5 p.m. Eastern time.
- Loss per share — $2 Sales
- Revenue — $64 million
- Deliveries Guide 2022 — 40,000 vehicles
Recently, Barclays analyst Brian Johnson lowered today Rivian’s price target to $47 from $115 maintaining an Equal Weight rating on the shares heading into Earnings Report. On the note released, the analyst says that believes the planned price increase was baked into investor expectations and the rollback of price increase leads him to cut selling price and margin assumptions through 2023. The electric truck maker’s shares shares hit earlier today a new All-Time-Low at $39.86.
Two weeks ago, Wells Fargo analyst Colin Langan lowered Rivian’s price target from $110 to $70 while maintaining an Equal Weight rating ahead of the March 10 Earnings report. Langan is bullish on the products and brand strategy, although he sees near-term headwinds including risk to Q1 delivery expectations, the negative impact from rising interest rates, increased BEV competition, and potential selling post the lock-up expiration in mid-May.
“We are bullish on the products and brand strategy; however, we see near-term headwinds.” —wrote the analyst. Rivian shares closed 8.36% lower on Tuesday session and are currently down 35% Year-to-date.
Rivian announced last week that has raised the price of its R1T pickup by 17% and R1S SUV by about 20%. The company didn’t unveiled how many orders were cancelled, however many reservation holders immediately complained about the decision. On Thursday, the company sent an e-mail to all reservation holders reversing the decision saying that the “original configured price will be honored” .
On February 24th, Rivian‘s Chief Executive Officer R.J. Scaringe said that the company is “making progress” in the increase of production for electric vehicles at its Normal, Illinois, assembly plant and is aiming to take 10% share in the EV market by 2030. The global semiconductor chip shortage is seen by Scaringe as the “most painful” constraint in the push to build production.