Rivian sees gross profit ahead, but some on Wall Street remain skeptical

By Claudia Assis

Rivian's stock drops more than 2% after Q2 print

Rivian Automotive Inc. told Wall Street that gross profit is in sight, but its recent quarterly report did little to remove concerns that a "bumpy" road could be ahead for the EV maker.

Rivian (RIVN) late Tuesday reported second-quarter results that were in line with expectations, and the company's stock fell after hours.

Losses continued into Wednesday, with the stock off more than 2% on a mixed day for carmakers and U.S. stocks.

In a note titled "On track, but bumpy path," UBS analyst Joseph Spak tweaked his price target on Rivian shares to $16, from $17, to account for modeling deliveries and pricing a "little more conservative" and plant downtime next year. The UBS price target implies an upside of around 13% for the stock.

Adam Jonas at Morgan Stanley questioned Rivian's "destination." The EV maker has proven its ability to raise capital, but is far from generating cash, he said. "Is VW a lifeline or a new chapter?"

In the end, the second-quarter print presented nothing "narrative-changing to significantly sway bulls or bears on this still 'relatively in favor' EV name," Jonas said.

Alex Potter at Piper Sandler agreed that Rivian's message had not changed. "After examining Q2 results and listening to the earnings call, we don't see how anyone could've grown more bearish (or more bullish, for that matter)."

Rivian also kept its 2024 guidance intact, including hopes to make about 57,000 EVs by the end of the year, which would compare with 57,232 vehicles last year, above the guidance of 54,000 vehicles.

The company guided for an Ebidta loss of around $2.7 billion and capital expenditures of $1.2 billion for the year.

"We remain highly skeptical of this guidance," CFRA analyst Garrett Nelson said. "Even if it achieves the goal, bottom-line losses are likely to continue for the foreseeable future, and the convertible notes issued to Volkswagen could be dilutive to shareholders."

The EV maker is indeed fresh from inking a deal with Volkswagen AG (XE:VOW) to form a joint venture by the end of the year, but besides some general comments that their proposed team-up is "moving along very well," Rivian didn't disclose more details on Tuesday.

All in all, "we continue to see a high likelihood that [Rivian] will have to lower the guidance later this year," Nelson said.

Shares of RIvian have lost about 40% so far this year, contrasting with gains of around 10% for the S&P 500 index SPX.

-Claudia Assis

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08-07-24 1336ET

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