This week alone, Electric Vehicle manufacturer Rivian (NASDAQ:RIVN) has plummeted by 25% as investors have more questions than answers ahead of the Q4 earnings call. Investors are fleeing this week as Rivian has confirmed they will be increasing their EV prices due to “inflationary pressure, increasing component costs, and unprecedented supply chain shortages and delays for parts (including semiconductor chips)” in a statement reported by Reuters.
With plenty to breakdown, this article will cover why Rivian Stock is dropping today and discuss the companies upcoming Q4 report.
So why is Rivian Stock dropping today?
One of the reasons why Rivian Stock is dropping is due to the pricing increase of the companies R1T pickup truck and R1S SUV models. As new market entrant into the competitive EV space, pricing remains a key element of increasing sales. Majority of the EV sector is priced in the luxury range, and investors are concerned a price increase during a time of inflationary pressures will deter potential customers and pre-orders.
Furthermore, the company also announced its Q4 results will be held on March 10. To say this earnings season has been a bloodbath would be somewhat of an understatement. Big tech has been at the brunt of lacking investor confidence and investors may be fleeing Rivian before its Q4 earnings announcement. if Rivian are to lower revenue guidance in the fourth quarter report, that may just be the nail in the coffin for the time being.
Furthermore, the wider market continues to bleed with EV companies such as Nio, Lucid Motors and even Tesla are down in todays trading session.
How Did Rivian perform in Q3?
For the third quarter, Rivian reported its first quarter of revenues, generating $1 Million from vehicle deliveries. However, the company also reported a mammoth net loss of $1.2 Billion, a 340% increase year over year. In addition, Rivian has cut their 2021 production target of 1,200 vehicles by a “few hundred” as supply chain issues continue to cause headaches for the North American EV start up.
What were the positives from Rivian’s third quarter report?
The good news is at this stage Rivian has raised a significant amount of capital in the quarter, with $19.9 billion in Cash or equivalents on the balance sheet. According to Rivian, the funding raised in 2021 will offer Rivian “the opportunity to execute on near-term objectives”, including commercialising the R1T and R1S in North America.
Furthermore, Rivian expect to begin construction on the Georgia facility in 2022. The facility has a 400,000 targeted annual production capacity with eventual co-located cell production. The Georgia facility project alongside its current operating Illinois factory, will aim to expand Rivian’s production capacity to 600,000+ vehicles annually according to Rivian.
Why is Rivian Stock Dropping? – The Bottom Line
Overall, Rivian Stock is dropping due to increased vehicle pricing and the upcoming Q4 earnings call. In addition, the wider market sentiment has created the perfect storm for Rivian Stock. Rivian Stock currently has a market capitalisation of $45 Billion, and is not yet computing the revenues to support its valuation.
In saying this, multiple analysts see the stock as a “compelling investment opportunity” with the companies ties to Amazon and its high quality EV model performance. The debate on valuation and future potential between the bulls and the bears will continue to be the main talking point on Rivian Stock as we move through 2022.
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The content above is strictly for informational purposes only and is not financial advice nor does it constitute a recommendation. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.