Rivian's latest quarterly results reveal performance that fell short of market expectations, as the company reported an adjusted loss per share of 99 cents, compared to the expected loss of 92 cents. Revenue for the quarter came in at $874 million, lower than the expected $990 million.
In light of these results, Rivian adjusted its earnings before interest, taxes, depreciation, and amortization (EBITDA) forecast, now forecasting a loss of between $2.83 billion and $2.88 billion. This marks a revision from a previous estimate that called for a loss of about $2.7 billion.
Despite these challenges, the company remains optimistic about achieving “modest positive gross profit” in the fourth quarter of this year, a goal that has attracted significant attention from both investors and analysts. CEO RJ Scaringe emphasized the company's commitment to profitability during an interview with CNBC, saying, “Our primary goal is to increase profitability. Looking at the fourth quarter, we continue to lean towards gross margin.”
For the third quarter, Rivian reported a negative gross profit of $392 million, an improvement from the loss of $477 million reported in the same period last year. This suggests some progress in managing production costs, although the company still faces significant hurdles.
Following the earnings announcement, Rivian shares rose 2% in after-hours trading, recovering from an initial decline. The stock closed at $10.05, reflecting a daily gain of 3.5%. Analysts, including Tom Narayan of RBC Capital Markets, believe the company's restatement of its gross profit targets could positively influence its stock performance. Narayan noted that many in the market had speculated that Rivian might abandon its profit target, and the decision to maintain it could lead to greater investor confidence.
Looking at Rivian's financial health, the company reported a net loss of $1.1 billion for the quarter, a reduction from the $1.37 billion loss suffered in the third quarter of the previous year. Revenue also showed a decline, falling 34.6% year over year, which includes $8 million generated from regulatory credit sales. This decrease in revenue was primarily attributed to supplier outages that disrupted production lead times.
Scaringe addressed these manufacturing challenges, recognizing the difficulties posed by supplier issues and calling them a “short-term problem.” The company had previously revised its annual production forecast from 57,000 units to a range of 47,000 to 49,000 units due to these ongoing supply chain disruptions. This production estimate was reiterated in the latest earnings call.
The supplier challenges have coincided with Rivian's efforts to launch its second-generation “R1” vehicles, which will feature significant upgrades in the 2025 model year, particularly regarding the vehicle's interior components.
In a strategic move separate from its quarterly results, Rivian also announced a significant partnership with LG Energy Solution aimed at providing U.S.-made battery cells for upcoming R2 vehicles, scheduled for release in 2026. This collaboration is expected to strengthen Rivian's manufacturing capabilities and will improve its competitive advantage in the electric vehicle market.
As Rivian navigates this challenging period, the focus remains on overcoming supply chain obstacles while aiming for profitability. The company's ability to adapt and respond to current market conditions will be critical as it seeks to consolidate its position in the rapidly evolving electric vehicle landscape.
