What happened

Extending its losses from March, Rivian Automotive (RIVN 2.73%) stock plunged by another 17.2% in April, according to data provided by S&P Global Market Intelligence. The electric vehicle (EV) stock is now down by almost 33% since March as of this writing. Turns out, investors and analysts alike are growing cautious about Rivian ahead of its first-quarter earnings release. 

So what

The young automaker made investors jittery right as April kicked off when it revealed that it had produced 9,395 EVs and delivered 7,946 units in the first quarter.

While those numbers were significantly higher year over year, Rivian's production fell almost 6% sequentially while its deliveries dropped by about 1%. That poured cold water on investors' hopes, as did the company's assertion that it was "on track" to deliver 50,000 units in 2023. Investors had been expecting more, especially after Bloomberg reported that Rivian management had told employees during an internal all-hands meeting that the company could produce as many as 62,000 EVs this year. Although a Reuters article later quoted a Rivian spokesperson as saying that the 62,000 figure had been "taken out of context," investors expected more aggression from Rivian on the production front this year, especially after its underwhelming output in 2022.

Rivian also faces a new pricing headwind, as last month, U.S. buyers of its trucks lost eligibility for the $7,500 federal EV tax credit because its batteries don't meet the Treasury Department's recently clarified sourcing standards. For an EV to qualify for the full credit now, a significant percentage of the key minerals that go into its battery must be extracted or processed in the U.S., and more than half of the battery manufacturing and component assembly must occur domestically as well. Meanwhile, EV leader Tesla has been aggressively cutting its own vehicles' prices.

All of this has left analysts markedly less excited about Rivian's near-term prospects. Several analysts downgraded Rivian stock in April, which exacerbated its price fall last month.

Piper Sandler analyst Alexander Potter, for example, slashed his price target dramatically to $15 a share from $63 per share. According to TheFly.com, Potter noted that Rivian will have to build millions of vehicles to justify its high cost structure, but that will require it to find billions of dollars more in funding. Right now, Rivian is burning cash rapidly, with negative free cash flow of more than $6 billion last year.

Analysts at Morgan Stanley and RBC Capital also downgraded their price targets on Rivian last month given the near-term uncertainty. Although most analysts are bullish about Rivian in the long term, slow production, weak margins, macro headwinds, and an EV price war have dampened their near-term views on it.

Now what

Rivian will report its first-quarter numbers on May 9, and the biggest possible catalyst for the stock would be an upgraded production outlook for the year. However, it appears unlikely that management will deliver that, so investors instead may want to focus on another number that's even more important: backlog. Interestingly, Rivian didn't reveal its backlog in the fourth quarter. At last report, between its R1T pickup truck and R1S SUV, it had net preorders of 114,000 units as of Nov. 7.