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Early Opportunities
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August 11, 2023

IonQ (IONQ) and Rivian (RIVN) Report Q2 Results

IonQ (IONQ) reported yesterday with no big surprises, but continued execution is helping shares today. Revenue of $5.5 million was about a million more than the few analysts following the stock expected. There are indications that the hardware order from Quantum Basel is helping both on the bookings and technology validation fronts. It doesn’t hurt that the AQ 29 platform just launched a full seven months ahead of schedule. Big picture, the list of “believers” is growing larger. And it should be noted that Morgan Stanley is now following the stock and boosted their price target from 7 to 16, acknowledging both that valuation in this situation is somewhat irrelevant while future opportunities, risks, AI story, etc. are what investors are focusing on. This is a big possible reward, big possible loss type stock. Invest accordingly. Given the more risk-off environment since I added IONQ and the jump in price today, I’m moving to hold for a spell. HOLD

Rivian (RIVN) reported this week that Q2 2023 revenue came in at $1.12 billion, ahead of $1.0 billion consensus. Operating loss of -$1.29 billion was also less than expectations of -$1.53 billion. The company delivered 12,640 vehicles, up from 7,946 in the previous quarter (Q1 2023). It produced 13,992 vehicles, up 49% from the previous quarter. Rivian burned $1.62 billion in the quarter and ended with $10.2 billion in cash. There was a lot of talk on the call about what Rivian is doing to reduce parts in its vehicles, which will reduce cost per vehicle. With production growing (2023 production guidance was increased from 50k to 52k vehicles) and supply chain improvements, management sees a turn to positive gross margin sometime next year. This means it may not need to raise capital in 2024, which would be a positive. The growth story remains intact, even if the stock didn’t act well this week. Keeping at buy. BUY

Tyler Laundon is chief analyst of the limited-subscription advisory, Cabot Small-Cap Confidential and grand slam advisory Cabot Early Opportunities. He has spent his entire career managing, consulting and analyzing start-up and small-cap companies. His hands-on experience has taught Tyler that the development of a superior business model is the biggest factor in determining a company’s long-term success. Accordingly, his research focuses on assessing the viability of management’s growth strategies, trends in addressable markets and achievement of major developmental milestones.