- Growth misses Q4 2022 forecast by a mile
- Stubborn supply chain snarl-ups causing havoc
- Stock falls 8% overnight, 77% off IPO price
Amazon (AMZN:NASDAQ)-backed electric vehicle start-up Rivian Automotive (RIVN:NASDAQ) continues to struggle to ramp up production.
For 2023, the electric vehicle manufacturer forecasts it will get 50,000 vehicles off the production line. That would be roughly double last year’s 24,337 (narrowly below the 25,000 target) but below expectations of roughly 60,000, as estimated by several Wall Street analysts.
PERSISTENT SUPPLY CHAIN PROBLEMS
The Californian company continues to blame supply chain snarl-ups and price inflation for vehicle components, and doesn’t see this ending in 2023, so no wonder investors took a dim view. Pre-market data shows Rivian shares opening later today (1 Mar) down nearly 8% at $17.85.
That’s 77% off the $78 IPO (initial public offering) price in November 2021. You get the sense that investor patience is being stretched.
For the fourth-quarter of last year Rivian reported revenues at $663 million, significantly worse than the consensus estimate of $729 million as it delivered only 8,054 vehicles from 10,020 produced. Yes, losses per share were lower than anticipated, at -$1.73 versus the consensus estimate of -$1.96 but this is scant consolation for investors who have backed the business for its early-stage growth potential.
Those investors include e-commerce giant Amazon, with about 18% of the company, which has handed Rivian the task of providing at least 100,000 delivery trucks as part of its own go-green goals.
HOW RIVIAN PLANS TO PROGRESS
Rivian is not blind to the challenge ahead and says it is taking steps to ramp up production and reduce material costs by slimming down its engineering and vehicle design, along with trimming running costs. For example, its forthcoming R2 model will use a simplified assembly and sourcing process to achieve ‘a meaningfully lower cost structure,’ says founder and chief executive RJ Scaringe.
The company claims these benefits will start to show through quickly, perhaps as soon as Q1 2023 but adds caution too. ‘It won’t necessarily be a linear path over the course of the next several quarters but we will start to see those impacts as early as Q1 as we start to reduce the material costs in our vehicles and the technology introductions,’ said chief financial officer Claire McDonough.
Rivian has net cash of about $12 billion.
