Rivian Reports Bigger Loss, Says Current Models Won't Qualify for Tax Breaks

August 12, 2022 6:14 AM EDT
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Shares of Rivian (NASDAQ: RIVN) are up about 2% in premarket Friday trading after the electric vehicle (EV) company reported Q2 results.

Rivian reported a Q2 adjusted loss per share of $1.62, almost in line with the expected loss per share of $1.61. Revenue came in at $364 million, topping the consensus estimates of $335.7 million.

Rivian also reported an adjusted EBITDA loss of $1.31 billion, wider than the estimated loss of $1.23 billion. Negative adjusted free cash flow stood at $1.56 billion at the end of the quarter.

For the full fiscal year, Rivian expects an adjusted EBITDA loss of $5.45 billion, bigger than the initially expected loss of $4.75 billion, while analysts were looking for a $4.93 billion loss. The electric vehicle (EV) maker expects FY capital expenditure of about $2 billion, down from the previous forecast of $2.6 billion, and compared to analyst estimates of $2.51 billion. RIVN expects to produce 25,000 vehicles for the year, missing the consensus projection of 26,032.

“Supply chain continues to be the limiting factor of our production; however, through close partnership with our suppliers, we are making progress. We expect to be able to add a second shift for vehicle assembly toward the end of the third quarter,” the company said in a statement.

Furthermore, Rivian also said many of its current vehicle models will not be eligible for new federal tax incentives. More specifically, Rivian’s R1 series of premium pickups and SUVs are not likely to receive benefits from tax incentives from the newly passed energy and climate bill.

However, the carmaker stands a chance to qualify for subsidies of up to $40,000 per vehicle for the large electric commercial vans such as the ones it produces for Amazon. Also, the more affordable R2 models, expected to launch in 2025, should also receive tax credits because those will have a domestic battery supply chain.

Morgan Stanley analyst Adam Jonas said the results showed that demand remains strong while supply is also getting better,

“We believe Rivian should be able to get most (if not all of) FY23 behind them before they would need more capital. Our model currently assumes a $3bn equity raise in FY23, $2bn in FY24 and $1bn in FY25… Following the recent strong run-up in the shares, we see 2Q results as part 'expected’ part ‘relief and part 'what now?',” Jonas wrote in a client note.

Goldman Sachs analyst Mark Delaney hiked the price target to $41 from $36 after “solid” Q2 results.

“We believe the report was an incremental positive, as the rate of new pre-orders increased (reaching 98K of backlog as of the end of 2Q) and Rivian is making progress at ramping production (albeit with a now higher estimate of EBITDA losses given increased inflationary and supply chain costs),” Delaney told clients.

Still, the analyst maintained his Neutral rating on the RIVN stock as he continues to “see some downside risk to intermediate term Street estimates.”

By Senad Karaahmetovic

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Goldman Sachs, Morgan Stanley, Senad Karaahmetovic