Rivian (RIVN) stock has hit an all-time low following a rating downgrade and job cuts

After disappointing Q4 results, Rivian (RIVN) stock took a double-dip, sending stock prices to all-time lows. Remaining at its lowest value since going public, the electric car maker is looking to keep costs under control in 2024.

Q4 earnings miss the mark

After releasing its fourth-quarter and full-year earnings results on Wednesday, Rivian announced it would lay off 10% of its salaried employees.

The move enables them to “maximize the amount of impact we can have as a company,” RJ Scaringe, CEO of Rivian, explained on a company media call. Scaring said the company is “not immune to current economic and geopolitical uncertainties.”

The impact of rising interest rates has rippled across the industry. Rivian's order bank has “declined significantly” as the electric vehicle manufacturer expands its production.

Although deliveries more than doubled last year, with more than 50,000 vehicles delivered, the pace slowed in the fourth quarter.

As CFO Claire McDonough explained in November, Rivian expected “a larger gap between production and delivery” as Amazon limits new car intake during the holidays.

Although Rivian's net losses improved The fourth quarter ($1.5 billion vs. $1.7 billion) As of 2022, the electric vehicle manufacturer's gross margins have taken a hit as vehicle deliveries decline.

S3'22 S4'22 S1'23 S2'23 S3'23 S4'23
Rivian loss per vehicle $139,277 $124,162 $67,329 $32,594 $30,500 $43,372
Rivian's loss per vehicle is a quarter

Rivian lost $43,372 for every vehicle it delivered in the fourth quarter. Although the number improved throughout the year, Rivian's gross profit per vehicle fell from $30,648 in Q3, $32,595 in Q2, and $67,329 in Q1 2023.

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Keep in mind, this is still an improvement of about $81,000 over last year when Rivian was losing $124,162 on every electric vehicle delivered.

Rivian stock is at an all-time low
Rivian R1T (Source: Rivian)

Rivian stock hits all-time low after rating downgrade

Rivian stock was already trending lower after missing Q4 earnings, and is now at an all-time low of roughly $10 a share.

As the company announced in November, it will shut down its consumer and commercial production lines for several weeks in the second quarter. The planned downtime is intended to bring cost savings and new technology to the R1 platform.

Rivian expects the changes will “significantly reduce” material costs as it moves out of 2024. With the upgrades, Rivian believes it will achieve “modest growth profit” in the fourth quarter of 2024.

Rivian production
Rivian production in its normal and sick facilities (Source: Rivian)

Although they are only planned for part of the second quarter, the improvements “will impact all four quarters of production,” McDonough explained. As a result, Rivian expects deliveries to be 10% to 15% lower than in Q4, suggesting around 12K to 12.5K in Q1.

Rivian's project production will remain steady this year, with about 57,000 vehicles being built at its Normal, Ill., plant.

The electric car manufacturer's future promises were not enough to attract analysts. Rivian stock took a double cut this week, as UBS and JP Morgan both cut their price targets.

Rivian stock is at an all-time low
Rivian stock chart since its November 2021 IPO (Source: TradingView)

Analyst Joseph Spak lowered his price target from $24 to $8 per share. The target indicates a decline of more than 23% from the current price of $10.40 per share.

Although “we were optimistic about the RIVN product and brand ultimately winning out,” Sbaak said in a note to clients, “the rapidly changing EV backdrop is causing us to reevaluate our view on demand.”

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Rivian's path to profitability and cash flow may be more difficult, Sabbak noted. UBS's average annual delivery forecast for 2025 to 2027 is about 33% lower than before, the analyst said. Spak also raised concerns about 2024 gross profit and EBITDA targets.

The analyst expects a significant cash increase in 2025, perhaps around 30% of its market value. Meanwhile, strong demand for electric vehicles could boost Rivian shares, Sbaak said. Improving cost reductions could eliminate the need for more capital, Plumber said.

JPMorgan also lowered its price target to $11, citing missed targets and disappointing new guidance.

Even Tesla CEO Elon Musk got in on the action Published on X (Twitter), saying that “the current path has led to them being bankrupt in approximately six quarters.” “Maybe this path will change, but it has not changed yet.”

(Source: Elon Musk/X)

Take Electric

Although there are real concerns about Rivian's financial health and ability to turn a profit, the electric car maker is implementing a plan to control costs.

Rivian's R1S was the best-selling electric vehicle in the United States last year, with a price tag of more than $70,000. The brand was the fifth best-selling electric vehicle maker in the United States last year. Rivian has a good product and has already established itself as a true maker of luxury electric vehicles. Now, the company needs to reach its next growth stage.

The company has already made planned cost-cutting upgrades with its R1 vehicles. On March 7, Rivian will introduce its affordable R2 electric SUV, which will significantly expand its market.

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Rivian will need to either cut costs further or introduce new revenue streams such as services, as R2 production is not scheduled to begin until 2026.

Rivian “remains confident” that cash and cash equivalents can fund operations through 2025, McDonough said.

source: CNBC

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