Published - March 01, 2023 @ 11:00 AM (EET)

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While earnings season has essentially come to an end, after the bell on Tuesday, Rivian Automotive Inc. (NASDAQ:RIVN) reported mixed fourth-quarter earnings and a lackluster production outlook that fell short of Wall Street's expectations, signaling continued troubles on the manufacturing floor.

Following the results, shares traded 8% lower in extended trading, reversing earlier gains, but still up 4.6% for the session.

WHAT HAPPENED

The EV maker reported $663 million in revenue for the quarter, below the $717 million analysts expected. Adjusted loss before interest, taxes, depreciation, and amortization were nearly $5.2 billion in 2022, narrower than the guidance of $5.4 billion in November.

The startup reported a net loss of $1.72 billion for the quarter, compared with $2.46 billion in the same year-ago period.

Vehicle deliveries in the fourth quarter totaled 8,054, while production was up 36% to 10,020, quarter-over-quarter. For the full fiscal year, revenue came in at $1.66 billion.

EV PRODUCTION

As it works to deliver vehicles to tens of thousands of anxious customers after recalling 12,716 to fix a faulty sensor in the front passenger seat, Rivian said it aimed to produce 50,000 vehicles this year.

Though that would be roughly double last year's amount, it's still below expectations of about 60,000, as several Wall Street analysts estimated. In addition, Rivian is focusing on increasing the production of its R1 truck and SUV as well as an electric delivery van built for its largest individual shareholder, Amazon (NASDAQ:AMZN).

Meanwhile, Rivian expects its gross margin to remain negative throughout the year, delaying the point at which the young company will prove it can handle growing pains and turn a profit with its EV concept.

As of the end of 2022, the company had about $12.1 billion in cash remaining, down from $13.8 billion at the end of the third quarter and $15.5 billion as of the preceding quarter.

NOW WHAT

Since Rivian's November 2021 public listing was the sixth-largest in US history and attracted back from major financial institutions, investors are looking to Rivian as a potential competitor to industry leader Tesla Inc (NASDAQ:TSLA).

However, the company is one of a group of EV startups whose growth ambitions have been thrown off course by mass-production difficulties. As a result, many of these businesses are now trying to preserve cash by cutting spending and initiating layoffs.

In its letter to shareholders, the company said, "Supply chain continues to be the main limiting factor of our production; during the quarter, we encountered multiple days of lost production due to supplier shortages. We expect supply chain challenges to persist into 2023 but with better predictability relative to what was experienced in 2022."

PRICE TARGET:  Based on 15 Analyst ratings covered by TipRanks in the last three months, Rivian's stock is a Moderate Buy (11 Buys, 3 Holds, 1 Sell). The average price target of $32.64 implies an upside potential of 69.12%.