Rivian reports the results after the bell. Here’s what investors need to know

Wall Street analysts have set the bar high for electric vehicle startup Rivian Automotive following its successful IPO last month, comparing CEO RJ Scaringe to Superman and saying the company is “the only one “able to challenge Tesla.

Whether Rivian and Scaringe, who look like Clark Kent, can live up to the hype will begin on Thursday after markets close, when the automaker releases its first quarterly financial results as a state-owned company.

Although Rivian has given earnings and production forecasts as part of its IPO, investors will be focused on any updates or changes to its plans. Specifically, vehicle production, consumer deliveries and pre-orders of its first electric vehicles.

The company’s revenue and bottom line are less relevant at this point as it attempts to ramp up production of three products simultaneously at its Normal, Illinois plant. Its first electric vehicles are the R1T pickup and R1S SUV for consumers and a commercial delivery van. for Amazon.

Overall, Wall Street analysts are warning investors to expect growth difficulties for Rivian, but they predict the company will successfully overcome those challenges and establish itself as a worthy competitor to Tesla and others. in the electric vehicle industry.

“Auto investors who missed Tesla have struggled to argue for legacy OEMs and a slew of SPAC EV start-ups over the past 12 months,” Morgan Stanley’s Adam Jonas wrote in a note. to investors last week initiating overweight Rivian with a $ 147 share price target. “While the risks remain, we believe Rivian has all of the key attributes to be ‘the one’ who sticks to your EV portfolio.”

Morgan Stanley’s price target is consistent with the overweight rating and target price of $ 134.08 per share based on 15 analysts compiled by FactSet.

Here’s more information on Rivian’s plans and what investors should know ahead of his third quarter results Thursday after the bell.

Rivian is a story of growth. Like many speculative electric vehicle start-ups, Rivian is betting on its future, not its current finances. He only started producing the R1T pickup in September and delivered few trucks and mostly to employees.

The company projects capital spending of around $ 8 billion through 2023, with some analysts such as John Murphy of BofA Securities predicting that Rivian will not make an operating profit until at least 2025.

For the third quarter, Rivian last month estimated operating losses of $ 745 million to $ 795 million and a net loss of $ 1.21 billion to $ 1.28 billion. He forecasted quarterly revenue of around $ 1 million.

Murphy, in a note to investors last week, said that “the short-term business success of the company will be measured by orders and production trends” rather than by financial data.

Wall Street is particularly focused on Rivian’s bookings as a barometer of demand.

Rivian revealed to investors last month that he had a backlog of preorders for 55,400 R1T and R1S vehicles from customers in North America and plans to deliver them by the end of 2023.

Aside from its mainstream pre-orders, any increase or advance on Rivian’s plans to deliver commercial vans to Amazon could be positive for the company’s inventory.

Amazon, which is the Rivian’s largest shareholder at 20%, has pre-ordered 100,000 electric vans from the start-up, which are expected until 2025.

Morgan Stanley’s Jonas said he believed Amazon’s order amount could be “stale” and “dramatically higher over time.”

Rivian’s plan to launch and increase production of three vehicles simultaneously would be intimidating for an established automaker, let alone a start-up. This is where Superman comes in.

Rivian needs to ramp up quickly and efficiently to materialize as a serious long-term competitor. That is, Clark Kent (RJ Scaringe) needs to step out of the phone booth as Superman soon to evolve Rivian and save the plane, ”Baird Equity Research analyst George Gianarikas told investors in a note.

Rivian said he plans to deliver around 1,000 R1Ts, 15 R1S SUVs and 10 delivery vans to Amazon in 2021.

Analysts said investors shouldn’t expect a perfect production acceleration curve, but a slow, steady curve for now with a few bumps along the way.

Joseph Spak of RBC Capital Markets said that “while there will undoubtedly be problems along the way,” he predicted Rivian will meet production targets, with compound annual growth of 52% by 2030.

“This fire-testing approach can help forge Rivian’s DNA by preparing him for future success,” he said in a note to investors.

Any announced delay in the timing of its products could be negative in the short term for investors, but also positive in the long term. The sooner automakers resolve production and quality issues before expanding manufacturing, the better.

Rivian had previously said he plans to start producing both the R1S SUV and Amazon vans by the end of this year at his plant in Illinois.

In addition to the typical problems of ramping up vehicle production, the automotive industry is also experiencing significant supply chain issues that could set Rivian back in the short term.

“Rivian is still in the early stages of its ramp-up, and although the company has a team of industry veterans, the supply chain environment remains challenging,” wrote Mark Delaney of Goldman Sachs in a note to investors.

While Rivian’s relationship with Amazon is viewed as positive, his relationship with Ford Motor, which owns around 12% of the company’s capital, is a bit more complicated. This is something that investors have observed.

What started as a friendly, collaborative relationship between the established automaker and the startup has seemed to turn strictly financial, with the parties ending joint development plans for a vehicle and Ford relinquishing a seat on Rivian’s board. .

Ford CEO Jim Farley, while praising Scaringe, called Rivian a competitor.

It is not known how long Ford plans to retain its stake in Rivian.

– CNBC Michael bloom contributed to this report.