Rivian Just Sold Some Extremely Valuable Vehicles in 2Q 2022

On July 6, Rivian Automotive, Inc. (NASDAQ: RIVN) announced that it produced 4,401 vehicles in 2Q 2022, including R1T pickup trucks, R1S SUVs and Amazon delivery vans. The company did not specify quantities produced on a model-by-model basis. Rivian delivered 4,467 vehicles in the quarter. Most importantly, based on this manufacturing report, Rivian reiterated that it is on track to reach its goal of producing 25,000 vehicles for the full year 2022.

Perhaps Rivian will be able to manufacture that many vehicles in 2022, but doing so will require a marked step-up in pace in 2H 2022. Rivian produced 6,954 units in the first half of the year, meaning the electric vehicle maker would have to produce just over 18,000 units in the second half of the year, or 160% more than in the first half.

Phrased differently, Rivian will have to manufacture just under 700 vehicles per week in 2H 2022 to reach its 25,000-unit goal for 2022. This would represent about a 74% increase from its rate over the period May 10 through June 30.

Total Vehicles ProducedWeekly Rate
January 1 through March 81,410147
March 9 through March 311,143348
April 1 through May 91,435258
May 10 through June 302,966399
1H 20226,954267
2H 2022 Goal18,046694
Full Year 2022 Goal25,000481

Despite the substantial questions implied by these numbers (can weekly production realistically grow by that much?), Rivian investors cheered the announcement. The company’s share price jumped 19% over a three-day span (US$31.99 at the close on July 8 from a close of US$26.86 on July 5).    

RBC Capital Markets had forecast that Rivian’s 2Q 2021 production would be about 3,400, so Rivian exceeded that broker’s forecast by about 1,000 vehicles. That overage proved to be consequential for Rivian shareholders. The company’s share price increase of US$5.13 since the day before the announcement equates to about a US$4.5 billion boost in stock market capitalization. Another way to look at the number: each car produced above Street expectations in 2Q 2022 was really worth around US$1.5 million (US$4.5 billion divided by 1,000). Those were quite valuable vehicles. 

Rivian boasts an extremely strong balance sheet: US$16.4 billion of cash against only $1.6 billion of debt. However, its March 31, 2022 cash balance declined US$1.7 billion from US$18.1 billion as of December 31, 2021. This, combined with its enormous cash burn projections for the remainder of 2022 (US$4.75 billion of negative adjusted EBITDA and US$2.6 billion of capital expenditures), could mean that Rivian will raise additional equity before the end of the year. The company has not disclosed when it plans to report 2Q 2022 earnings.

(in millions of U.S. dollars)Full Year 2022E2Q 20221Q 20224Q 2021
Revenue$95 $54 
Operating Income($1,579)($2,454)
Operating Cash Flow($1,034)($1,086)
Adjusted EBITDA($4,750)($1,144)($1,108)
Capital Expenditures($2,600)($418)($455)
Cash – Period End$16,432 $18,133 
Debt and Convertible Preferred – Period End$1,609 $1,533 
Shares Outstanding (millions) – Period End901 901 
Number of Vehicles Produced (A,B)25,0004,4012,5531,003
Number of Vehicles Delivered4,4671,227909
(A)  A total of 1,410 vehicles produced from January 1, 2022 through March 8, 2022.  In addition, 1,143 vehicles were produced from March 9, 2022 through March 31, 2022. (B)  From April 1, 2022 through May 9, 2022, Rivian produced about 1,435 vehicles.  From May 10, 2022 through June 30, 2022, Rivian produced 2,966 vehicles.

From a longer-term perspective, Rivian remains a challenging-to-value stock. Despite the recent rally the shares are down more than 80% from its November 2021 high, and after factoring in its US$14.8 billion net cash position, Rivian’s enterprise value is still US$13.5 billion. When compared against its projected 2022 adjusted EBITDA of negative US$4.75 billion, the valuation judgment is difficult.

Rivian Automotive, Inc. last traded at US$31.99 on the NASDAQ.

Information for this briefing was found via Edgar and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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