Rivian stock (RIVN) hasn’t been for the faint of heart, with shares down 82% over the past 12 months.
The electric vehicle (EV) start-up has faced several challenges, including rising material costs, which caused the company to raise the prices of its vehicles and contributed to widening losses. In Q3 2022, Rivian’s (RIVN:NSD) losses reached $1.7 billion, compared to $1.2 billion in the same period the previous year. In response to these cost pressures, Rivian laid off 6% of its workforce, around 900 employees, and had to recall almost all of its vehicles (around 12,000) to fix a loose fastener in the steering mechanism. Most recently, the company announced it would not move forward with its partnership with Mercedes-Benz to develop an EV van platform.
Production and Sales
Despite these difficulties, there are also positive developments at Rivian. The company has rapidly increased vehicle production, with Q3 2022 output up 67% to 7,363 vehicles. Rivian also aims to produce 25,000 vehicles in 2022, and is building a second plant in Georgia to support this goal. The company has already received an order for 100,000 electric vans from Amazon (AMZN), with more than 1,000 already on the road. Additionally, Rivian’s management has stated that the company has sufficient cash on hand to operate through 2025.
Investment Considerations
Given the potential for growth in the global EV market, estimated to be worth $1.4 trillion by 2027 according to Statista, investors may want to consider opening a small position in Rivian. However, it is important to approach this stock with caution due to its high risk and volatility. Rivian’s price-to-sales ratio, a measure of value, is significantly higher than that of its peers, indicating that the stock Analyst Ratings may be overvalued. Additionally, the company’s gross margin, a measure of profitability, is negative. As such, investors should carefully consider their risk tolerance and investment goals before adding Rivian to their portfolio.
