Rivian (RIVN) stock price has continued to underperform the market this year after the company lowered its guidance. It has crashed by 56% in 2024, while other EV companies have pared back their earlier losses. This retreat has brought its market cap to over $10 billion.
Rivian has underperformed other EV companies like Lucid, XPeng, Nio, and Tesla, as shown below.
Rivian is facing headwinds
Rivian’s downfall has been severe, especially for a company that was once valued at over $100 billion. At the time, most investors expected it to mirror Tesla’s growth since it focuses on the SUV segment, which is the most popular one in the US.
Rivian, however, has faced some challenges recently as demand for its vehicles has waned. The most recent deliveries results showed that its business was not doing well. Its vehicle production was 13,157 in the quarter, down from 16,304 in the same period last year.
Rivian delivered 10,018 vehicles, or 76% of what it produced. This is notable since the deliveries-to-production ratio has been trending downward. It stood at 96% in Q2’23 and 143% in the June quarter.
The company has also been burning cash fast in the past few years. As a result, the amount of cash in its balance sheet dropped from $11.56 billion in December 2022 to $7.86 billion last quarter.
In this period, the company has raised cash by selling stock. It raised $1.5 billion in 2023, a move that diluted shareholders. Over time, its outstanding shares have risen from 892 million in 2022 to over 1 billion today.
The company also received a $5 billion investment – or bailout – from Volkswagen earlier this year to bolster its balance sheet.
Rivian is also seeing substantial competition, especially from Tesla’s Cybertruck, whose sales have jumped recently.
Read more: Rivian (RIVN) stock: EV maker’s shares slip despite Fed’s rate cut
Rivian earnings ahead
A potential catalyst for Rivian shares is Tesla’s earnings this week, which showed that its business was doing well.
Its results showed that its automotive revenues rose by just 2% to $20 billion, while its energy generation, storage, and services revenues jumped to $2.37 billion and $2.7 billion.
Tesla tends to set the pace for other electric vehicle companies like Rivian and Lucid. As such, there is a likelihood that Rivian’s shares will do well in the near term as traders wait for its numbers on November 7.
Its most recent results showed that Rivian’s revenues in the three months to June stood at $1.15 billion, an increase from $1.12 billion in the same period last year.
It continued to lose money for each truck sold as its gross loss rose from $412 million to $451 million. In this, its gross margin was minus 39%, an improvement from the previous quarter’s minus 44%.
Rivian has been losing substantial sums of money. Its net loss during the quarter was $1.45 billion, higher than the $1.19 billion it made in Q2’23.
Analysts expect its challenges to continue for a while. Its third-quarter revenue is expected to come in at $1.03 billion, a 22% drop from the $1.3 billion it made in the same period last year.
Its fourth-quarter revenue is expected to come in at $1.3 billion, while its annual figure will be $4.7 billion, followed by $5.7 billion next year.
Rivian stock analysis
RIVN chart by TradingView
Analysts believe that Rivian stock is relatively undervalued. The average estimate is that its stock is worth $16.6, which is about 60% above the current level.
A case for Rivian can be made since its vehicles are well-regarded. It also has room to expand its business internationally. Unlike Tesla, Rivian sells most of its vehicles just in the US.
The challenge is that its loss-making streak will continue, which will see it raise additional cash in the future. It has already applied for a federal loan to help it restart its plant in Georgia and it is unclear whether it will receive it if Trump wins.
The daily chart shows that the RIVN share price has been in a downward trend in the past few months. It has remained below the descending trendline that connects the highest swing since September 2022.
Rivian has remained below the 50-day and 25-day Exponential Moving Averages (EMA). The MACD indicator has remained below the zero line, while the Relative Strength Index (RSI) is above the oversold level.
Therefore, at this stage, the stock will likely continue falling as long as it is below the two moving averages and the descending trendline. More downside will be confirmed if it drops below the key support at $8.28.
On the positive side, a move above these resistance levels will point to more gains in the longer term. Also, Rivian has a short interest of 12.2%, meaning that a short squeeze is a possibility.
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