Updated Aug 7 at 11:22am ET.
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The U.S. economy lost 23,000 jobs in July, falling well short of the 80,000 gains that analysts expected. Hiring for the previous two months was also revised lower, suggesting the labor market is cooling faster than anticipated.
For a company like Rivian that sells high-end electric SUVs and trucks, a weakening job market is a risk. When people feel less secure about their income, they are less likely to commit to a major purchase or a new car loan. This data will be important to watch as Rivian tries to ramp up sales of its new R2 platform to a broader group of buyers.
Source: Bloomberg Markets and Finance
Minneapolis Fed President Neel Kashkari suggested that the central bank should begin slowly raising interest rates. Interest rates are the cost of borrowing money, and the Federal Reserve raises them to cool down the economy when prices are rising too fast.
Higher rates are a headwind for Rivian because they make car loans more expensive for customers, which can hurt demand for high-priced electric trucks. Additionally, because Rivian is still spending heavily to build its new Georgia factory and is not yet consistently profitable, higher borrowing costs make it more expensive for the company to fund its growth.
Source: CNBC Television
Rivian lost about 47 cents per share last quarter, which was better than the 65-cent loss analysts were expecting. This improvement comes as the company began delivering its R2 SUV, a more affordable model priced at about $45,000 that is central to its plan to reach the mass market.
While the stock fell about 6 percent following the report, the results show the company is making progress on its goal to reach gross profitability, meaning it earns more on each vehicle than it costs to build, by the end of 2026. Management also raised its forecast for how many vehicles it expects to sell this year, suggesting that demand for its new models is holding up despite a generally tougher market for electric vehicles.
Source: Proactive Investors
RBC Capital raised its price target for the stock from $14 to $16 while keeping its rating at Sector Perform, which means they expect the stock to perform in line with the broader market. The move reflects a slightly more optimistic view after the company reported a narrower loss than expected and began deliveries of its new R2 platform.
Source: RBC Capital
Rivian reported revenue of about 1.66 billion dollars for the second quarter, beating the 1.52 billion dollars analysts expected. The company also lost less money than anticipated, reporting a loss of 47 cents per share compared to the 66 cents analysts predicted. This quarter marked a major milestone as the company began delivering its R2 SUV to external customers, a lower-priced model that is central to its plan to reach a much wider group of buyers.
Management also raised its outlook for full-year deliveries and lowered its planned spending on things like factories and equipment. This is a significant shift for a company that has historically spent heavily to build its business. By growing revenue while tightening its budget, Rivian is showing it can move toward sustainable profit even as it launches its most important vehicle to date.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
Analysts recently adjusted their outlooks following the company's second-quarter earnings report. Most experts are split, with 14 of 29 rating the stock a buy, and the average target of $17 suggests a modest 7% upside from today's price.
Management has a strong habit of clearing the bars they set, beating profit expectations in six of the last eight quarters. This suggests they have a firm handle on their costs.
| Expectation | |
|---|---|
| EPS | $-0.67 |
| Revenue | $1.96B |
Watch and listen
Bloomberg Podcasts · Video · Jul 7
Bloomberg Podcasts · Video · Jul 7
Bloomberg Podcasts · Video · Jul 7
