Rivian Automotive (RIVN -0.60%) stock is struggling to find a bottom. After slumping double.digits last week, the electric vehicle (EV) stock has plunged another 18% so far this week as of 9:30 a.m. ET Friday, according to data provided by S&P Global Market Intelligence.
Rivian asked for trouble when it recently increased prices of its EVs dramatically, citing inflationary pressures, only to roll back part of the decision later. Investors hoped Rivian would be able to pacify the market on March 10 with its fourth-quarter and full-year 2021 numbers and outlook for 2022.
Unfortunately, that wasn't to be.
Earlier in the week, Barclays analyst Brian Johnson slashed his price target on Rivian stock by a whopping 59% to $47 a share, according to TheFly.com, as he fears margin pressure on the EV maker. Although Rivian took back its decision to increase prices on vehicles booked prior to March 1, it also means the company will now have to absorb higher costs on those units, which could eat into its margins.
Meanwhile, prices of key raw materials for EVs have shot through the roof in the wake of the Russia-Ukraine conflict. For example, the price of nickel, a key metal used in EV batteries, more than doubled within hours on the London Metal Exchange earlier this week, forcing the exchange to suspend trading. The extraordinary rise in the price of nickel has even forced EV leader Tesla (TSLA -1.12%) to increase prices of its Model 3 and Model Y EVs. Rivian is already buckling under the pressure of rising input costs and a shortage in the supply of key materials like semiconductor chips.
Last evening, Rivian dashed what little hope investors had from the company.
Rivian had earlier revealed it produced 1,015 and delivered 920 vehicles in 2021 against its production target of 1,200 units. Things didn't improve much through the first quarter.
Rivian said it faced several headwinds in Q1, including supply chain constraints, a spike in COVID-19 cases, severe winter weather, and a planned 10-day shutdown of production. These factors limited Rivian's production, and it could produce only 1,410 vehicles in 2022 through March 8. Here are some more numbers you must know:
- Q4 revenue: $54 million
- Q4 net loss: $2.5 billion versus $353 million in the year-ago quarter
- 2021 net loss: $4.7 billion versus $1 billion in 2020
While these numbers indicate the cost pressures on Rivian, the real bummer is what the company expects in the year ahead.
Rivian now says it expects to have "sufficient parts and materials" to produce only 25,000 vehicles in 2022 between its three models, the R1T pickup truck, R1S SUV, and delivery van EDV. That's 50% of what the company says it could make if not for supply chain constraints.
Here's what I fear: Slow production could give those who preordered Rivian EVs and are miffed by the company's abrupt price hike decision yet another reason to cancel their bookings. As of March 8, Rivian had received 83,000 preorders for the R1T and R1S. Also, if you tally that with the 71,000 preorders Rivian had already secured as of Dec. 31, it appears the pace of preorders is slowing as well.
With Rivian also projecting $2.6 billion in capital expenditures and a negative gross margin for 2022, the market is wasting no time in dumping the EV stock that's still commanding a lofty market capitalization of $34 billion even after today's fall. I believe Rivian stock may have even further to fall.