Rivian Q3 Earnings Preview: R2 Revenues Are Path Into The Future, Just Like Tesla's Model 3

U.S.-based electric vehicle manufacturer Rivian Automotive Inc RIVN will report third-quarter (Q3) earnings on Nov. 7 after market hours.

The Street expects the company to report a negative $1.33 in EPS and $1.31 billion in revenue for the quarter.

Business & Financials: A lot of the current buzz around Rivian relates to its R2 model. But investors and analysts do realize that these only point to future revenues. Rivian will reveal the R2 in 2024. Manufacturing will likely begin in 2026. Much like Model 3, which took time to translate to revenues for Tesla Inc TSLA, R2 will take a couple of years before it can have the desired impact on the automakers’ business.

Investors are cautious due to the company’s earlier-than-anticipated fundraise. Rivian raised $1.5 billion in convertible senior notes, resulting in stock dilution.

CEO RJ Scaringe told Reuters that the new capital creates an additional buffer. The company puts meaningful investments into building its smaller R2 vehicle family. Investors are well aware of the company’s cash-strung situation.

Rivian continues to face significant cash burn ($1.62 billion per quarter). The need for continuous capital injection as R&D and production ramp-up, much like any electric vehicle manufacturer. However, having all bets (and investments) on R2 and future cash flows doesn’t appear to helping the stock.

Analyst Ratings & Price Action: RIVN stock is down 45% over the past year. It was trading at $17.71 at close on Friday. Now, Wall Street watchers see this as a buy-the-dip opportunity. Some even see it as an opportune time for Rivian to consider a strategic sale.

Analyst consensus is tilted toward the former. Recent upgrades point to a potential Buy opportunity.

• UBS analyst Joseph Spak rates the stock a Buy with a $24 price target.
• Chris Pierce of Needham reiterated Buy with a price target of $31.
• Cantor Fitzgerald’s Andres Sheppard is Overweight on the stock with a price target of $29.

The company partnered with Amazon.com Inc AMZN to supply EDVs for its deliveries in Germany. That’s one silver lining that analysts are excited about.

Also Read: Rivian Vehicles Charged From Wind, Solar Energy To Be Delivered Soon