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shares of Rivian Automotive (Riven -25.60%) Shares plunged 25.6% on Thursday after the electric vehicle (EV) maker released its 2023 Q4 report the previous afternoon.
The main reason for the stock price decline is that management announced production guidelines for 2024 that only match the number of cars the company produced in 2023. Rivian cited “economic and geopolitical uncertainties and pressures, particularly the impact of historically high interest rates,” as reasons for the cautious stance. The 2024 production outlook undoubtedly disappointed many investors.
Fourth-quarter headline numbers were in line with Wall Street expectations. Revenue slightly exceeded analyst consensus estimates, but adjusted loss per share slightly exceeded that.
By way of background, Rivian makes two fully electric vehicles for consumers: the R1T (pickup truck) and R1S (SUV). The company also produces electric delivery vehicles, which until November last year were only available as electric delivery vehicles. Amazonowns a significant stake in Rivian.
Below is a summary of Rivian’s fourth quarter 2023 and 2024 outlook focused on 10 key metrics.
1. Revenue increased 98% year over year
Rivian’s fourth-quarter revenue was $1.32 billion, beating Wall Street’s consensus estimate of $1.26 billion. This result was up 98% year over year, but quarter over quarter he was down 2%. Revenue was primarily generated from vehicles delivered during the quarter.
2. 17,541 vehicles produced, 8% increase from Q3
In the fourth quarter, Rivian produced a total of 17,541 vehicles, an 8% increase from the previous quarter. Also, during the fourth quarter the company delivered 13,972 vehicles, which was 10% less than the number in the third quarter.
Seasonality at the end of the year due to holidays is the reason why deliveries decreased while production increased quarter-on-quarter.
3. Amazon’s continued rollout of 100,000 delivery vans
Rivian continues to fulfill Amazon’s first order for 100,000 custom-designed electric delivery vans (EDVs). The company has not disclosed the production and delivery numbers of these vehicles. However, in a letter to shareholders, Amazon stated that due to expected seasonality, “the percentage of total revenue attributable to Amazon will be 8% in the fourth quarter of 2023, compared to 30% in the third quarter of 2023. ” he said.
And last quarter, Amazon shared that it had over 10,000 EDVs in its fleet.
4. Operating loss decreased by 12%
Operating loss was $1.58 billion, 12% smaller than the operating loss for the same period last year.
5. Adjusted loss per share decreased by 21%
Reported net loss was $1.52 billion, or $1.58 per share, an improvement of 16% from the year-ago period.
Net loss, adjusted for one-time items, was $1.31 billion, or $1.36 per share, an improvement of 21% from the year-ago period. The result was slightly below the adjusted loss of $1.32 per share that Wall Street had expected.
6. Cash used in operating activities decreased by 23%
In the fourth quarter, Rivian used $1.11 billion of cash in its operations. This result improved by 23% compared to the same period last year, but cash used in the third quarter expanded by 26%.
Free cash flow was negative $1.41 billion. This outflow decreased by 19% compared to the same period last year, but expanded by 32% compared to the previous quarter.
7. Cash and cash equivalents at end 2023 of $9.37 billion
Rivian ended the fourth quarter (and 2023) with $9.37 billion in cash, cash equivalents, and current investments and $4.43 billion in long-term debt on its balance sheet.
Given the company’s current cash burn rate of $1.41 billion per quarter, that means its cash balance will last about 6.6 quarters, or just over a year and a half. Relatively speaking, for an early-stage pure-play EV maker, Rivian’s liquidity position isn’t too bad, but it’s certainly one that investors need to monitor closely.
8. Approximately 10% reduction in salaried workers
As part of its efforts to increase efficiency and reduce costs, Rivian on Wednesday announced plans to lay off about 10% of its salaried employees.
9. Expected production volume in 2024 to be 57,000 units
Rivian expects total production of 57,000 units in 2024. This corresponds to a production volume of 57,232 units in 2023. By the way, production in 2023 increased by 135% compared to the previous year.
Management also provided guidance for 2024 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of negative $2.7 billion. By the way, in 2023, this indicator was – $ 3.99 billion.
10. R2 SUV will be announced on March 7th
Rivian is scheduled to announce the mid-sized SUV “R2” on March 7th. The company said in a letter to shareholders that the vehicle is “designed to deliver a significantly lower price point and cost structure.”
Production outlook for 2024 is disappointing but not surprising
In short, Rivian delivered a decent fourth quarter report, but its 2024 production guidance was disappointing. Still, the company’s cautious outlook is not surprising given the state of the EV market. The growth rate of the EV market has slowed over the past year, mainly due to macro issues such as high interest rates.
On a positive note, the company expects to achieve “decent” gross margins in the fourth quarter of 2024.
I’ll repeat what I wrote in item 7. “Relatively speaking, as an early-stage pure-play EV maker, Rivian’s liquidity position isn’t too bad, but it’s certainly one that investors need to monitor closely.”
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