While Rivian Automotive Inc (NASDAQ:RIVN) shares fell on the back of its first-quarter earnings, analysts said the results were roughly in line with expectations and there were signs of improvement.
The Q1 results surpassed revenue expectations at $1.20 billion but fell short on profitability, with an EBITDA loss of $798 million.
Investment bank UBS and brokerage Wedbush both felt the results were mixed but there were some encouraging signs.
With a likely a step backward in profitability in the second quarter due to expected plant downtime, a "steep inflection" is needed in the second half, said UBS, in order for Rivian to get to its reiterated full-year guidance of a $2.7 billion EBITDA loss.
Wall Street is not confident as a whole, with consensus expectations for a $2.9 billion EBITDA loss for the year, with UBS predicting $3.34 billion.
That said, the Swiss bank saw "some signs" of this and "arguably some larger underlying improvement" in the earnings, including improved gross profit/loss per vehicle even with extra costs from suppliers and other exceptional items.
"Still, we believe there will be questions over demand amid a slowing EV market," UBS said, ahead of the earnings call.
At Wedbush, analysts Dan Ives said Rivian's decision to move its R2 production to its factory in Normal, Illinois to save around $1.20 billion in 2025 and 2026, "was a good strategic move for the company to save capital".
With retooling innovations complete for its R1 vehicle, the company is also expecting a 30% increase in line rate, with R1 capacity at 56,000 units per year, which Ives said will improve the company’s margin profile into the second half of the year.
"Although we still remain confident in the long-term Rivian vision, it will take some serious strides for the company to regain trust in the short-term vision in the eyes of the Street."