After four straight sessions of gains in which shares rallied more than 30%, Rivian (NASDAQ:RIVN) is under pressure on Monday. Specifically, RIVN stock is down about 7.6% on the day. The dip comes on reports that Rivian will cut 5% of its workforce.
The reporting cites non-manufacturing jobs that are at risk, potentially indicating that production is fine. It also says that the workforce reduction is in areas where the company grew too quickly.
Specifically, “The cuts will focus on nonmanufacturing roles, including teams with duplicate functions … The company, which has more than 14,000 employees, could target an overall reduction of around 5%.”
Some investors are extrapolating the potential for job cuts to imply that production is down. However, just last week the company reported its second-quarter delivery results. Rivian produced and delivered more than 4,400 vehicles last quarter, with both figures up significantly from the first quarter. Additionally, the company reaffirmed that it is on track to produce 25,000 vehicles this year.
RIVN Stock Remains Vulnerable
The workforce reports shouldn’t imply too much for RIVN stock. That’s particularly true after we just received the company’s quarterly delivery results. Additionally, those results were enough to help give a lift to other EV stocks, like Lucid Motors (NASDAQ:LCID), as both companies have struggled with supply chain issues this year.
That said, it’s not the only automaker looking at reducing its overhead.
Tesla (NASDAQ:TSLA) plans to cut 10% of its salaried workforce. At the time though, those reports — which surfaced from a company-wide email from CEO Elon Musk — triggered investor fears that Tesla was cutting production jobs too. In a follow-up from Musk, he clarified that the cuts were related to non-manufacturing jobs.
Rivian is in a bit of a different position than most upstart EV makers. The company has been backed by companies like Amazon (NASDAQ:AMZN) and Ford (NYSE:F), and even counts Amazon as a customer. Further, it’s got $17 billion in cash and restricted cash to ride through any economic or supply-chain related issues. That said, management clearly has a focus on costs.
The path for RIVN stock likely rides on two things: EV production and the trend in growth stocks.
The stock will struggle for upside momentum if it can’t deliver on its short- and long-term production goals. Further, EV stocks like Rivian, Lucid, Tesla, Nio (NYSE:NIO) and others enjoyed an explosive rally in 2021, only to fall flat in 2022. Until that trend changes — and until there’s relief from the overall bear market — RIVN stock remains susceptible to declines.
On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
