2024 wasn't off to a great start for Rivian Automotive (RIVN 6.10%) shareholders. After diving as much as 11% early Tuesday morning, Rivian shares were still down by 9.7% as of 1:30 p.m. ET.
The twist is that the sell-off came after the company released some positive production and delivery data. But the stock had soared by more than 40% in December, giving some investors reason to want to sell the stock and lock in profits on the first trading day of 2024.
Production keeps ramping higher
The big news was Rivian's fourth-quarter and full-year vehicle delivery results. The company meaningfully surpassed its most recent prediction for 2023 deliveries. Just two months ago, it boosted its 2023 guidance for production of about 54,000 electric vehicles (EVs). It ended up making more than 57,000 EVs and delivering just over 50,000.
That makes Rivian one of the few EV makers that has consistently raised and beat production estimates for 2023. So why did the stock tank today?
It's likely because of the stock's massive surge in December as investors apparently expected Rivian to impress with its fourth-quarter production. So that begs the question -- is today's drop a buying opportunity?
Keep an eye on cash
While Rivian's manufacturing ramp up has been impressive, it continues to bleed cash. The company reported a net loss of more than $1.3 billion in the third quarter. It spent nearly $900 million on third-quarter operating activities. That's what potential investors should pay attention to going forward.
As Rivian continues to scale up its manufacturing operations, it should stem those losses. But how the stock performs will depend on how quickly it can do that. Rivian has done a fine job in raising capital for its start-up operations. But its cash position has been steadily declining.
Data source: Rivian Automotive. Chart by author.
Those interested in the stock should mark Feb. 21 on their calendars. That's when the company will release its full quarterly report. That will include its cash position as of Dec. 31.
If its operational performance continues to slow its pace of losses, Rivian could become cash-flow positive before its cash balance gets too low. That's the metric to watch.
