Rivian Gives Investors a Taste of the Anxiety Its Consumers Feel

Key Points

• Rivian stock is down nearly 17% the day after reporting it was expecting to deliver approximately 10,000 fewer vehicles than expected in 2023. 
• The company also announced its third recall since going public in 2021. 
• The supply chain for semiconductor chips is still a key sticking point for the EV manufacturer in its pursuit of profit.  
• Analysts are still slightly bullish on the stock, but investors may still face some downside risk in the short-term.  

Shares of Rivian Automotive, Inc. NASDAQ: RIVN are down more than 17% the day after the company delivered a disappointing earnings report. The results were mixed and not altogether poor, but they were still enough to give investors a taste of consumers' anxiety about electric vehicles. 

Rivian closed the books on 2022 with a surprise to the upside in earnings per share. The loss of $1.73 per share was less than the loss of $1.89 per share forecast. But topline revenue came in at $663 million, 9% below the $729.47 million analysts expected.  

What seemed to sink RIVN stock was the company’s forecast to deliver 50,000 EVs in 2023. Analysts were expecting the number to come in at 60,000. That was on top of reporting that it produced 24,337 in 2022, missing the target of 25,000. That’s a different kind of range anxiety to the one consumers have, but it adds to some investors' uneasiness.  

And adding even more uncertainty, Rivian announced its third recall since going public in 2022. This time, the EV maker is recalling 12,700 vehicles due to a potential problem with a sensor in the front passenger seat-belt system.  

The Supply Chain is Still Kinked 

The company’s estimated delivery numbers show is that it will still be some time before the supply chain is truly fixed. The company acknowledged as much by saying their estimates are based on the availability of the power semiconductors they need for their vehicles.  

On the conference call, chief executive officer RJ Scaringe told analysts, "We wish we could have the components still to fully run the plant across all lines, across multiple shifts, but that's not the case." 

The company is taking steps to ensure a stable supply, and it believes there will be more predictability in the supply chain in 2023. But it still won’t change the delivery results for next year. It’s an example of why the electric vehicle revolution may not move as fast as some consumers would like it. 

When Will the Company be Profitable? 

Rivian is giving investors anxiety about when the company will be profitable. That’s not likely to happen anytime soon. And Canaccord analyst George Gianarikas summarized investors anxiety by saying Rivian investors and reservation holders want “faster production, a quicker ramp to profitability and more cash cushion on the balance sheet.” 

That being said the company is projecting positive gross profit in 2024. And there were some other bright spots in the report. The company said its operating expenses were in-line with 2021. And its capex spending came in at $1.4 billion, lower than the $1.8 billion in the prior year. Plus, the company does believe it will generate enough revenue to ensure it has enough cash to get through 2024.  

Is the Bottom in For RIVN Stock? 

Rivian stock is down over 73% in the last 12 months. And every time investors believe it can’t get worse, it has gotten worse. Is it finally safe for investors on the sidelines to invest in the stock?  

If you believe the analysts, your answer may be a cautious yes. The consensus rating of analysts tracked by MarketBeat is a Moderate Buy with a price target of $35.33, which is 119% above the current price. And since earnings, several analysts have lowered their price targets but not their rating for the stock.  

Rivian produces and delivers cars. And there was nothing in the report to suggest that customers are canceling reservations. There’s something to be said for that in this economic climate. However, until the company can ease anxiety over its supply chain and lack of profits, investors betting on Rivian to be the next Tesla may be disappointed.