Rivian inventory drops to lowest in six weeks on weaker 2023 outlook

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Rivian Automotive Inc. inventory dropped greater than 17% on Wednesday, a day after the electric-vehicle maker pinned combined quarterly outcomes and a weaker manufacturing steering on manufacturing snags that many on Wall Road thought had been within the rearview mirror.

Rivian inventory
RIVN,
-16.42%
was on monitor for its lowest shut since Jan. 20 and its worst one-day drop since Might 9, when it fell 21%. The inventory is down 90% from its report closing excessive of $172.01 hit in November 2021 shortly after its large IPO.

The corporate late Tuesday reported disappointing outcomes for its fourth quarter and stated it continued to be hampered by supply-chain issues.

Rivian guided for the manufacturing of about 50,000 automobiles this yr, from lower than 25,000 automobiles produced in 2022.

See additionally: Elon Musk to unveil Tesla’s ‘Grasp Plan 3’ on Wednesday’s investor day — right here’s what to anticipate

The 2023 outlook was disappointing, Tom Narayan with RBC Capital stated in a notice Wednesday. Narayan minimize his value goal on Rivian shares to $28, from $50, “to be extra in keeping with peer multiples.” The brand new value goal implies a 76% upside over Wednesday’s share value.

“(Rivian is) nonetheless battling provide chain challenges that (administration) indicated can be the principle limiting issue this yr. Particularly, this pertains to restricted provide of energy semiconductors” that are unlikely to enhance till the second half of the yr, the analyst stated.

Negatives are outweighing the positives in the intervening time, wrote Michael Shlisky with Davidson. Shlisky additionally minimize his value goal on Rivian inventory to $16, from $23, zeroing in on the below-expectation manufacturing outlook.

“That stated, (Rivian) outlined a number of the strategic strikes that underpin a part of the shortfall, and money burn is predicted to decelerate steadily,” the analyst stated.

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The EV maker “didn’t paint a powerful image on new demand, both, however famous that it’s booked into 2024 due to preorders.” General, “with the information circulate nonetheless skewing unfavorable, we’re staying cautious.”

Chris McNally at Evercore ISI famous that the below-consensus manufacturing steering will result in fewer than 45,000 gross sales due to the manufacturing to deliveries lag, or about $4 billion in income for the yr. Rivian’s Ebitda loss and capital expenditures result in a free money circulate burn of $6 billion or better.

Rivian turned a public firm with about $18 billion in money, and its year-end 2022 money of $12.1 billion “ought to dwindle to (about $6 billion) by YE23, which is able to elevate funding issues,” McNally stated.

The analyst estimated that Rivian will burn a further $5 billion to $6 billion FCF by way of 2024 and 20225, probably turning Ebitda optimistic in 2025 and 2026 “which is able to necessitate a capital elevate by ’24 on the newest.”

Shares of Rivian have misplaced about 74% up to now 12 months, in contrast with losses of round 8% for the S&P 500 index.
SPX,
-0.18%

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