Is Rivian Stock A Buy With The CEO Selling And The EV Startup Cutting 2024 Guidance?

Rivian Automotive (RIVN) shares have plummeted 55% in 2024 as the EV startup is looking to challenge Tesla (TSLA), Ford (F), General Motors (GM) and other autos with its adventure-styled electric vehicles.

The startup saw third-quarter vehicle deliveries come in below forecasts and Rivian lowered its full-year production guidance early Friday amid an ongoing “component shortage” in its vehicle production.

Rivian announced it delivered 10,018 vehicles in Q3 and produced 13,157 units at its manufacturing facility in Normal, Illinois. Analyst consensus had Rivian third-quarter deliveries totaling around 12,670 units, according to FactSet. A year ago, Rivian delivered 15,564 units while producing 16,304 vehicles.

Rivian also said Friday that it is revising its annual production guidance to 47,000-49,000 vehicles. Rivian did reaffirm its annual delivery outlook of 50,500-52,000 vehicles, representing low single-digit growth as compared to 2023. The company had been targeting full-year production of 57,000 units.

The EV startup said in the release Friday that it is “experiencing a production disruption due to a shortage of a shared component on the R1 and RCV platforms.”

“This supply shortage impact began in Q3 of this year, has become more acute in recent weeks and continues,” the company wrote.

Bloomberg reported late Monday there was a miscommunication earlier in 2024 between Rivian and supplier Essex Furukawa, a unit of Superior Essex. This has resulted in Rivian now not having
access to copper windings, a key component for Rivian’s electric motors.

Rivian stock has tumbled more than 30% over the past two months, adding another 6.8% drop in October. The stock is trading below both its 200-day moving average and the 50-day line, down 86% below its IPO price of $78, according to MarketSurge analysis.

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Rivian Chief Executive RJ Scaringe has also repeatedly sold shares of RIVN since June, according to regulatory filings. Most recently, Scaringe sold 83,333 RIVN shares for about $969,587.79 on or around Sept. 23. The Rivian executive previously sold 83,333 shares for about $1,140,003.77 on Sept. 12. Scaringe has exercised RIVN stock options eight times since June, according to SEC filings.

Second-Quarter Earnings And Volkswagen

On Aug. 6, Rivian reported a worse-than-expected loss in the second quarter while revenue came in higher than analyst projections. Meanwhile, the EV startup said its joint venture with Volkswagen (VWAGY) is expected to close by the fourth quarter.

Rivian announced a loss of $1.46 per share in the second quarter — compared to a $1.27 per share loss in Q2 2023 — while revenue totaled $1.158 billion, up 3% vs. a year ago. Total revenue from regulatory credits came in at $17 million for the quarter, according to the after-hours report. Ahead of earnings, analysts expected a Q2 loss of $1.24 per share and revenue totaling $1.148 billion.

On an adjusted basis, Rivian saw a loss of $1.26 per share, with analysts expecting a $1.14 per share loss.

Rivian ended Q2 with $7.867 billion in cash, cash equivalents and short-term investments. This includes $1 billion of an unsecured convertible note issued to Volkswagen.

Rivian Sees Loss Per Vehicle Come Down

The EV startup also reported that cost of revenues came out to around $4,278 per vehicle delivered in the quarter. Rivian lost around $32,700 per vehicle in the second quarter. In Q1, Rivian lost more than $38,700 per vehicle delivered.

Rivian has also affirmed in recent months its goal of positive gross profit per vehicle by the fourth quarter.

The startup has repeatedly stated its path to gross profit per unit delivered is primarily by reducing material costs, along with regulatory credits and other efforts.

“The second quarter has been a defining one for Rivian,” Scaringe told analysts on the Q2 earnings call. “The changes we made to the R1 platform have allowed us to reduce material and manufacturing costs, while simultaneously improving performance and capabilities.”

In early July, Rivian announced it delivered 13,790 vehicles in Q2 and produced 9,612 units at its manufacturing facility in Normal, Ill. Rivian also reaffirmed full-year production guidance of 57,000 units.

Rivian’s Volkswagen Deal

Meanwhile, Rivian also announced in June a joint venture with Volkswagen. The $5 billion plan involves the global auto giant investing in the EV startup in order to leverage some of its engineering and designs.

The partnership will focus on software along with electrical architecture design and development, according to Rivian executives. Currently, the joint venture does not include battery technology, propulsion platforms, high-voltage systems or autonomous driving.

However, German language-outlet Handelsblatt reported in July that Volkswagen and Rivian are apparently looking at expanding its partnership to include hardware and joint production. VW’s U.S. electric brand “Scout” could also be included in the partnership with Rivian, according to the report.

The two companies expect the deal will total $5 billion. This includes an initial $1 billion investment by Volkswagen and then plans for another $4 billion.

Scaringe said in the Q2 earnings release that the integration with Volkswagen is “moving along very well” and that Rivian expects to close the joint venture in the fourth quarter.

“The output from our joint venture will see Rivian’s technology in vehicles all around the world, helping to create more consumer choice and speed up the transition away from fossil fuels,” Scaringe said.

EV Startup Redesigns Lineup

In June, Rivian announced it revamped its pickup truck and SUV models. Rivian said pricing for the second-generation R1S SUV will increase $1,000 from current models to start at $75,900, with the trimotor trim starting at around $106,000.

The starting pricing for the R1T pickup will remain at $69,900. However, the trimotor option will run around $100,000.

Rivian has not yet shared details on range and pricing for all the vehicle trims.

The company said Thursday it has changed more than half the hardware components for the updated products and reengineered its batteries.

“We continue to evolve our flagship R1 vehicles, offering quality and performance without compromise,” Scaringe said in a statement. “Our revamped R1S and R1T push the technical boundaries further, creating our most capable products to date.”

Analyst Adam Jonas Weighs In On Rivian Stock

Adam Jonas, Morgan Stanley’s high-profile autos analyst, met with Rivian management in late May. The analyst came away from the gathering with the belief that Rivian is “uniquely positioned within autos (other than Tesla) on scaling a fully integrated software stack critical to unlocking the AI opportunity.”

“At a market value 1/60 that of Tesla,” Jonas added. “The stock’s direction is a balance of dilution risk vs. potential strategic partner re-rate.”

The Rivian Reveal

The EV startup unveiled the R2 — its smaller, cheaper, next-generation vehicle and platform — on March 7. The vehicle has an estimated starting price of $45,000 with expectations it will also qualify for the $7,500 Inflation Reduction Act tax credit.

Rivian planned to produce the vehicle at its new factory in Georgia. However, the company halted construction of the $5 billion plant and is opening an R2 production line at its Illinois plant.

Production of the R2 platform is expected to begin in 2026 with deliveries set for the first half of 2026.

Rivian also announced the R3, a more compact crossover style vehicle that uses the R2 platform, and a high-performance R3X offering. The company has not mentioned pricing or delivery estimates for the R3 or R3X.

Rivian has said the R3 will be at a lower price point than the R2 and that deliveries for the R3X will begin after the R2.

On the Feb. 21 Q4 earnings call, Scaringe said that the “R2 represents the essence of our brand, while targeting the significant midsized SUV segment, a massive market with limited compelling EV options beyond Tesla.”

Rivian Stock Falters

Rivian ended 2023 on a high note as interest in electric-pickup trucks appeared to be picking up following initial deliveries of the Tesla Cybertruck. At the end of December, Baird even designated RIVN as a “best idea” for 2024. The firm wrote that Rivian has remained supply constrained relative to demand longer than several of its EV peers.

However, RIVN shares have dropped since then. The decline in 2024 comes after RIVN gained 40% in December 2023, moving above key levels of resistance and clearing an aggressive entry point.

In December 2023, AT&T (T) announced that starting in 2024 it will begin “piloting” Rivian vehicles in its fleet. AT&T expected to begin adding the Rivian Commercial Van and R1 vehicles to its fleet in early 2024. It is unclear how many Rivian vehicles AT&T will order. The company partnership also sees AT&T as the exclusive provider of connectivity to all Rivian vehicles, in the U.S. and Canada.

Rivian had reported during its third-quarter earnings it would allow more customers beyond Amazon, which remains a key buyer, to purchase its commercial electric vans.

Rivian currently prioritizes production of electric vans for Amazon. The online marketplace already has around 1,000 Rivian commercial vans delivering packages in major cities in the U.S. It has ordered 100,000 of Rivian’s electric vans.

Amazon currently has a 16.7% stake in Rivian, according to FactSet. However, Amazon is also looking elsewhere to electrify its fleet.

Rivian Stock IPO

The EV startup currently produces an electric pickup-truck, SUV and commercial vans. Rivian makes its vehicles in Normal, Ill. The plant has a production capacity of 150,000 units annually. With the R2 production line, the capacity will total 215,000 units per year, according to Rivian,

Rivian rolled out the first all-electric pickup truck, the R1T, on Sept. 14, 2021, and its R1S SUV in the fall of 2022. The company launched with great fanfare on Wall Street.

On Nov. 9, 2021, the much-anticipated RIVN IPO priced strong, an upsized 153 million shares at $78 a share — above the expected range. Rivian stock has since fallen well below its IPO price.

Nevertheless, Rivian had a monster IPO, raising $11.9 billion and giving the company an initial valuation of roughly $77 billion. Rivian stock soared to 179.47 on Nov. 16, 2021, then sold off sharply over the following weeks and months.

Rivian Stock

RIVN shares have tumbled more than 50% in 2024, and are currently below the 200-day moving average and the 50-day line. Rivian stock is about 86% below its IPO price of $78, according to MarketSurge analysis.

The stock declined about 14% in August and sank 20.6% in September. Prior to August, RIVN booked three consecutive monthly advances.

Rivian stock ranks 11th in IBD’s Automakers industry group. RIVN has a 4 Composite Rating out of 99. Additionally, the stock has an 8 Relative Strength Rating and its EPS Rating is 20 out of 99.

Rivian is targeting positive gross profit per vehicle by the fourth quarter. However, shares are down 50% in 2024 and below key levels. For now, RIVN is not yet a buy.

Please follow Kit Norton on X @KitNorton for more coverage.