This week, EV giants Rivian and NIO are set to release their quarterly earnings. With Tesla (TSLA), a major EV industry leader, losing about 70% in 2022, one is left to wonder what these other companies’ earnings will reveal about the market in general, and the EV sector in particular.
An Overview of Tesla's Route
To better understand the performance of other EV companies, it may be helpful to take a brief look at Tesla’s trajectory. Perhaps one of the prominent players in the EV field, Tesla has suffered ostensible losses last year with some even deeming it one of the biggest losers in 2022. Factors ranging from inflation to central banks’ ensuing rate hikes, renewed COVID-19 restrictions in Shanghai, home to one of Tesla’s biggest factories, Musk’s controversial purchase of Twitter, and the war in Ukraine and supply-chain issues may have caused many investors and traders to shy away from the company.
Nonetheless, despite these hurdles, when it reported its Q4 2022 earnings on January 25th, Tesla reported better-than-expected earnings. In addition, its CEO, Elon Musk, revealed that Tesla’s orders were growing “at almost twice the rate of production.” Consequently, it appears that the company is on an upward trajectory this year as it was able to gain over 81%.
Moreover, Tesla is expected to hold its first official investor day this week on the 1st of March and there are those that believe that this day could impact some of Tesla’s peers. While the topics that could be discussed that day are still unclear, some believe that Tesla might discuss its business plans and goals, energy ventures, new model announcements, and updates on Tesla’s Cybertruck and Roadster 2. While these announcements could clearly influence Tesla’s growth, many believe that they could have a direct impact on competitors, Rivian and NIO as well as Lucid (LCID). As such, traders may want to keep an eye out for this special day to see how this can impact major EV companies which are also expected to report their earnings. (Source:Seeking Alpha)
Rivian’s Upcoming Earnings Report
American automotive and EV manufacturer, Rivian (RIVN) is scheduled to announce its Q4 2022 earnings on Tuesday, February 28th after the ring of the bell. Rivian too, along with other industry peers had to face numerous hardships last year as it had to grapple with a weakening economy and rising competition. Therefore, it might not come as a surprise to learn that the company lost a whopping 84.9% of its value throughout 2022. However, it might be worth noting that since the beginning of the year, Rivian appears to be relatively stable and has lost about 0.11% of its value.
However, despite these dreary losses, while some may be apprehensive about the prospect of success for this company, others believe it could threaten Tesla as the world's top electric vehicle company. Some Wall Street analysts expect Rivian to report YoY earnings growth and higher revenues. Others, on the other hand, seem to hold a less rosy outlook for the EV maker as production concerns, rising competition, and economic hurdles could still drive the stock downward. Furthermore, the fact that Lucid, another EV maker and rival reported lower-than-expected earnings recently on Wednesday the 22nd, could also increase the skepticism surrounding other EV stocks’ growth. Traders and investors will have to see how its upcoming earnings and Tesla’s investor day will affect its value.
What Could NIO’s Earnings Reveal?
The Chinese automobile and EV manufacturer is expected to report its Q4 2022 and full-year 2022 earnings on Wednesday, the 1st of March before the ring of the bell. NIO (NIO) has also had a difficult 2022, as it had to face economic headwinds and COVID shutdowns in China as well as supply and demand issues and rising competition which caused it to drop by over 70%. However, some believe that Tesla’s recent gains coupled with the rise of the Chinese Yuan and a unique “battery swaps” system could help drive NIO’s prices up.
As it stands, Wall Street analysts expect the company to report an EPS loss of 23 cents compared to the same quarter a year ago whereby it lost 21 cents. Nonetheless, revenue seems to be higher as it stands at $2.56 billion compared to $1.55 reported during the year-ago quarter.
In addition, revenue and delivery expectations for 2023 appear to be much higher than in 2022. Nonetheless, these predictions could prove false if NIO becomes forced into lowering its prices in order to keep up with Tesla’s price cuts. In such a case, NIO could end up incurring losses in its profit margins. Up till now, in 2023, NIO seems to be on a less bumpy road compared to last year as the company only lost 3.7% of its value. Still, traders will have to patiently wait for Wednesday’s data to determine the upcoming steps for the Chinese EV maker. (Source:Nasdaq)
Whether or not Tesla will be able to sustain its recent gains depends largely on its upcoming investor meeting which could also have a significant impact on its industry peers among which are NIO and Rivian. Traders and market watchers will have to keep a keen eye on the upcoming earnings reports too to see how the EV sector will perform and to better understand the outlook for 2023.