{"id":11416,"date":"2023-11-09T01:18:49","date_gmt":"2023-11-09T01:18:49","guid":{"rendered":"https:\/\/infundpros.com\/investment\/rivians-daunting-production-ramp-keeps-investors-cautious\/"},"modified":"2023-11-09T01:18:50","modified_gmt":"2023-11-09T01:18:50","slug":"rivians-daunting-production-ramp-keeps-investors-cautious","status":"publish","type":"post","link":"https:\/\/infundpros.com\/?p=11416","title":{"rendered":"Rivian\u2019s \u2018daunting\u2019 production ramp keeps investors cautious"},"content":{"rendered":"
\n

Investors seemed unimpressed by Rivian Automotive Inc.\u2019s better-than-expected quarter, and looked ahead at the EV maker\u2019s planned downtime and continued cash burn to fret anew.<\/p>\n

Rivian
\n RIVN,
\n -2.41%<\/bg-quote>
\n late Tuesday reported a narrower third-quarter loss. It also upped its production guidance for the year and said it ended its exclusivity deal with Amazon.com Inc.
\n AMZN,
\n -0.44%<\/bg-quote>
\n for its electric last-mile delivery vans, adding that it was talking with other companies about the vehicles. <\/p>\n

\n

None of this helped Rivian\u2019s stock, which was down more than 5% on Wednesday. <\/p>\n

Deutsche Bank analyst Emmanuel Rosner said he was \u201cencouraged\u201d by some of Rivian\u2019s progress as it scales its business. \u201cAt the same time, Rivian was very open this will require multi weeks of plant shutdowns\u201d next year, along with a \u201crather elongated ramp\u201d in the current quarter.<\/p>\n

\u201cWe believe this could mean 2024 volume expectations from [Wall Street] may be too high\u201d at 75,00 vehicles, he said. Deutsche Bank cut its next year\u2019s delivery forecast to 65,000, from a previous call of 85,000. <\/p>\n

Garrett Nelson with CFRA upgraded his rating on Rivian\u2019s shares to the equivalent of neutral, from sell, remaining somewhat cautious on the stock. <\/p>\n

Rivian\u2019s beat was driven by stronger-than-expected sales, he said. <\/p>\n

\u201cStill, with a quarterly cash burn in the neighborhood of [$1 billion] and the company still nowhere near hitting the mass production rates which would achieve a more competitive cost structure, we see further difficulties ahead,\u201d he said. <\/p>\n

Cantor Fitzgerald\u2019s Andres Sheppard, who has a buy rating on Rivian shares, sounded more optimistic about the EV maker\u2019s prospects. <\/p>\n

To meet its 2023 production guidance of 54,000 vehicles, which Rivian on Tuesday raised from a previous expectation of 52,000 vehicles, the company needs to produce \u201conly\u201d 14,309 vehicles in fourth quarter, which is less than what it produced in the third quarter and achievable also because fourth quarter \u201ctends to be the strongest for production\/delivery,\u201d Sheppard said. <\/p>\n

\u201cAdditionally, we are encouraged by the company\u2019s continuous improvement in gross margins,\u201d and the end of exclusivity with Amazon is \u201cbeneficial, given we expect it to permit the company to pursue other commercial opportunities for its EDVs.\u201d<\/p>\n

\u201cWhile we continue to expect Rivian to fulfill its agreement with Amazon,
and we continue to view this relationship as a meaningful differentiator, we expect the company to aggressively pursue additional commercial partnerships, which could result in increased revenues currently not included in our model,\u201d the analyst said. <\/p>\n

Piper Sandler analyst Alexander Potter perhaps summarized it best: Third-quarter earnings were \u201cheartening, but we\u2019re still neutral ahead of a daunting ramp\u201d in 2024 and 2025. <\/p>\n

The current stock valuation \u201cbalances Rivian\u2019s recently strong execution against a challenging 2+ year execution plan,\u201d Potter said. \u201cRivian has one of the most appealing brands in the U.S. auto industry, but we struggle to model capex and cash flow.\u201d<\/p>\n

That will be \u201cespecially true\u201d in the next couple of years, as Rivian builds its new plant in the Atlanta area and temporarily shuts down for retooling its existing plant in Illinois a couple of times, the analyst said. \u201cThere\u2019s a non-zero risk of delays and cost overruns.\u201d<\/p>\n

Shares of Rivian have lost about 8% so far this year, contrasting with gains of around 14% for the S&P 500 index
\n SPX.<\/span>\n <\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Investors seemed unimpressed by Rivian Automotive Inc.\u2019s better-than-expected quarter, and looked ahead at the EV maker\u2019s planned downtime and continued cash burn…<\/p>\n","protected":false},"author":1,"featured_media":11417,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[24],"tags":[],"class_list":{"0":"post-11416","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-investment"},"yoast_head":"\nRivian\u2019s \u2018daunting\u2019 production ramp keeps investors cautious | inFundPros<\/title>\n<meta name=\"description\" content=\"Investors seemed unimpressed by Rivian Automotive Inc.\u2019s better-than-expected quarter, and looked ahead at the EV maker\u2019s planned downtime and continued\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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