Rivian (NASDAQ: $RIVN) Announces Layoffs, Guidance Misses Estimates

Rivian Automotive, Inc. (NASDAQ: $RIVN) is an electric vehicle maker and automotive technology company founded in 2009. The company specializes in producing electric SUVs and pickup trucks on an adaptable platform that it can use for future vehicle designs or used by other companies. They also produce the Rivian EDV, an electric delivery van.

On Wednesday, February 21, 2024, Rivian released its Q4 and full-year results after markets closed for fiscal 2023 to a negative market reception.

Rivian Q4 Results Miss Estimates

The EV maker reported fourth-quarter revenue of $1.32 billion, above estimates of $1.26 billion. It reported a loss of $1.36 per share, below estimates of $1.32 per share.

Rivian produced 17,541 vehicles in the fourth quarter and delivered 13,972 vehicles. For fiscal 2023, the company produced 57,232 units and delivered 50,122 units.

As of the end of the fourth quarter, the company had $9.37 billion in cash and cash equivalents, and liquidity of $10.47 billion, including an asset-based revolving credit facility.

Rivian Announces Workforce Cuts

Rivian stated that it had achieved meaningful improvements in operating efficiency in FY23. It noted that gross profit per delivered vehicle had improved by around $81,000 compared to Q422. Rivian announced it was cutting its workforce by about 10% as part of the ongoing cost-reduction measures.

Guidance Comes In Below Estimates

Rivian’s guidance came in below what analysts had projected. The company stated that “economic and geopolitical uncertainties and pressures” had informed its full-year 2024 guidance. It pointed to the impact of high-interest rates on consumers.

For fiscal 2024, Rivian expects to produce 57,000 vehicles, in line with the fiscal 2023 number but below estimates of 81,700.

Rivian’s Cash Burn Continues

The Amazon-backed company has been burning through cash to increase production of R1T pickup trucks and R1S SUVs amidst a slowdown in EV demand. While the cash burn has improved slightly, it still makes thousands of dollars in losses for each vehicle produced.

Rivian’s expenses increased to $975 million for the fourth quarter, compared to $795 million in Q422. Full-year 2023 operating expenses remained flat at $3.71 billion, compared to $3.73 billion in FY22.

Total loss from operations in Q423 was $1.58 billion, compared to $1.80 billion in Q422. For FY23, the company’s loss from operations was $5.74 billion, compared to $6.86 billion in FY22.

Rivian (RIVN) Stock Performance

Rivian closed trading on Wednesday, February 21, 2024, 3.15% lower at $15.39 per share. The slide continued in pre-market trading after its dismal fiscal 2024 guidance was released. As of 7:55 AM EST, RIVN stock had lost 17.06% of its closing price, dropping to $12.76 per share.

RIVN Stock Forecast

Stock analysts give Rivian stock a moderate buy rating as of the close of trading on February 21, 2024. The most bullish forecast a high of $36, while the most bearish forecast a low of $14 per share. RIVN stock’s average price forecast is $22.15, a 43.92% upside based on its Wednesday closing price.

Should You Buy Rivian Stock?

On Tuesday, February 20, 2024, The Financial Times reported that ABL CEO Eric Norris said lithium demand was slowing down. Norris cut projected global lithium demand by 10% to 3.3 million tons by 2030.

Spot prices for lithium have fallen by 82% to around $13,500 per ton since the start of 2023. Albemarle (ABL), the world’s largest lithium producer, has been pushed into losses, reporting a $618 million net loss in Q423 from a profit of $1.1 billion the previous year. According to Norris, the current demand and supply dynamics are unsustainable.

The drop in lithium demand due to the slowdown in EV demand does not bode well for the future of the EV car industry. Consequently, RIVN stock is not lucrative right now.

While Rvian’s long-term potential is undeniable, the company has its work cut out before the market considers the stock a buy. 

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