Why Rivian Stock Was Sliding Today

First-quarter results were mostly as expected, but the EV maker needs to change the narrative.

Shares of Rivian (RIVN -3.66%) were falling again after the company reported first-quarter results that generally matched expectations, but the company continued to burn cash and lose money. It also maintained its modest production guidance for the year, showing it is still challenged by a broader slowdown in the electric vehicle (EV) industry. The sell-off seems to reflect an ongoing decline in investor confidence in both the EV sector and Rivian.

As a result, the stock was down 7.5% as of 9:52 a.m. ET.

A Rivian pickup truck driving through the desert.

Image source: Rivian.

Rivian is still burning piles of cash

Rivian produced 13,980 vehicles and delivered 13,588, essentially on track with its target to produce 57,000 vehicles this year, only slightly more than the roughly 50,000 vehicles it produced last year.

Revenue in the quarter reached $1.2 billion, up 82% from the quarter a year ago and slightly better than the analyst consensus of $1.16 billion. The company hit a number of its goals in the quarter, including a retooling upgrade at its R1 plant in Normal, Illinois, and it unveiled its new midsized platform, which includes its R2 and R3 vehicles, to considerable fanfare in March.

However, investor attention continues to focus on its slowing growth rate and wide losses. The company had a negative gross profit of more than $38,000 per vehicle in the quarter, or $527 million total, compared to a negative gross profit of $535 million in the quarter a year ago. Rivian took a writedown of $328 million related to lower of cost or net realizable value (LCNRV) accounting rules. It expects those charges to be mostly over by the fourth quarter of 2024, when it expects to report a positive gross profit.

On the bottom line, it reported a generally accepted accounting principles (GAAP) loss of $1.45 billion, above $1.35 billion in the quarter a year ago. On a per-share basis, the loss of $1.45 was worse than estimates of $1.17.

What’s next for Rivian

While the gross profit target is encouraging, demand pressure may prove to be the bigger challenge for Rivian as it’s unclear when the EV market will return to significant growth. The company maintained its production guidance for the year and still sees an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss of $2.7 billion.

Given that forecast and its large operating costs, any recovery in the stock could still be years away.

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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