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Rivian Shares Have A Seesaw Day As Losses Widen After Earlier Apple Link

Analyst Team trader
Updated 8 May 2024

Electric vehicle manufacturer Rivian Automotive has affirmed its production forecast for 2024, setting targets that fall short of Wall Street expectations.

Despite the optimistic views of analysts, Rivian has conveyed a more cautious outlook in its latest release, acknowledging a recent production halt that has contributed to a greater-than-anticipated loss for the first quarter. Some of the headline numbers from the quarter.

  • Revenue beat -$1.2bn against consensus $1.16bn
  • EPS miss – ($1.45) against consensus ($1.17)
  • Production outlook maintained – 57,000 vehicles
  • Q1 Loss – $1.45bn

After the market closed, Rivian shares dropped by more 6%, and now sit down 5.37% in the premarket today. Having started trading in very buoyant mood and gapping up, the stock has taken a 13% swing through the day. A decent portion of the negativity can be attributed to the company's conservative estimates, which have aroused concerns pertaining to the demand for its premium R1S SUVs and R1T pickups.

The automaker had halted productions at the outset of the second quarter, citing the need for assembly line enhancements aimed at reducing long-term costs. However, Rivian resumed production towards the end of last month with a renewed focus on cost efficiency.

“First-quarter results exceeded our outlook and set a strong foundation for the remainder of the year as we focus on continued demand generation, delivering cost and plant efficiency improvements, advancing R2 development, and driving towards profitability

J Scaringe, Rivian Founder and CEO

Rivian outlook is to manufacture 57,000 vehicles in the current year, notably less than the 62,277 units analysts have projected but on track with previous guidance. Factors like factory retooling expenses and potential limitations in production due to supplier changes have been cited as the reasons for the tempered production ambitions.

In an attempt to curb spending without resorting to significant price reductions, Rivian has rolled out more economically priced versions of its vehicles and has introduced the R2 SUV, a less expensive model designed for the mass market. These strategic moves are part of the company's broader cost-saving measures.

Further reinforcing its cost-saving strategy, Rivian has cut its annual capital expenditure forecast by $550 million, bringing the total down to $1.2 billion. The company has renegotiated supplier contracts and is moving the production of certain parts in-house as a way to lessen dependence on external vendors.

For the first quarter, Rivian reported revenues of $1.2 billion, slightly surpassing the average estimate of analysts. Nevertheless, the net loss for the quarter expanded to $1.45 billion, resulting in a loss per share that exceeded expectations. Cash reserves have seen a decrease, falling to $5.98 billion from $7.86 billion reported in the fourth quarter. In line with its frugality, Rivian is looking to slash over $2 billion in expenses by manufacturing its smaller SUV at its plant in Illinois.

Elsewhere in Rivian News – Potential Apple Partnership

Apple Inc. is reportedly in talks regarding a possible partnership following the end of its long-running “Project Titan” – the much-speculated Apple Car venture – in late February.

A potential collaboration between Apple and Rivian could herald a significant move for both companies. For Apple, it represents a strategic shift and a new opportunity in the evolving mobility space following the shelving of its own car project. On the other side, Rivian could benefit from the tech giant's expertise in user experience design, software, and, not least, its considerable financial resources.

Despite Rivian's promising technology and IP within the EV landscape, the automaker has faced a series of challenges, including production delays and increased competition. Although the details of the discussions are yet to be publicly disclosed, the implications of such a partnership possess the potential to reshape dynamics within the technology and automotive industries.

All in all, a very volatile day for Rivian holders and followers.

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The AskTraders Analyst Team features experts in technical and fundamental analysis, as well as traders specializing in stocks, forex, and cryptocurrency.